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 Citation

 

"Healthcare Basics." By James D. Agresti. Just Facts, January 25, 2012. Revised 5/19/14. http://www.justfacts.com/healthcare.basics.asp

 

 Finding what you want

 


 Spending, Prices, and Costs


* Between 1960 and 2009, healthcare spending in the United States increased:


• from a yearly average of $147 per person to $8,086 (by 55 times).

• from a yearly average of $1,082 per person in inflation-adjusted 2010 dollars to $8,218 (by 7.6 times).

• from 5.2% of the nation's economy to 17.8% (by 3.4 times).[1]


[2]


* In 1942, the price for a maternity room at Christ Hospital in Jersey City, NJ was $7.00 per day.[3] Adjusting for inflation, this amounts to $97.29 in 2011 dollars.[4] In 2011, the price for a maternity room at the same hospital was $1,360 per day.[5]


* In 1980, the average price for a typical hospital room in the U.S. was $127 per day.[6] Adjusting for inflation, this amounts to $349 in 2011 dollars.[7]


* A 2011 survey of eleven hospitals in Ohio (where state law requires hospitals to publish their prices) found that the daily price of a typical hospital room ranged from $688 to $2,425, with the average being $1,393 and the median $1,322.[8]

 

Third-party payments


NOTE: Third-party payments refer to healthcare expenses that are not directly paid by consumers but by other entities such as governments and insurance companies. Such entities are called "third-parties" because they typically do not deliver or receive the healthcare (i.e., they are not the patients or doctors).


* Between 1960 and 2009, the portion of U.S. healthcare expenses paid:


• directly by consumers decreased from 48% to 12%.

• by government increased from 24% to 48%.

• by private insurance increased from 21% to 32%.[9]


* Per the Encyclopedia of Health Care Management:


[B]ecause most medical care is delivered with third-party payments, and the purchaser is in dire need of the services, the typical patient has little interest in price.[10]


* A Rand Corporation study tracked the healthcare spending of 2,756 families during 1974-1982. The families were given insurance plans that covered all healthcare expenses above $1,000 per year. (Accounting for inflation, $1,000 during the timeframe of this study equates to about $3,500 in 2011 dollars.[11])


The families were then randomly assigned to plans that covered their healthcare expenses below $1,000 per year, covering either 5%, 50%, 75%, or 100% of this spending. The results were as follows:


• Families with 100% coverage spent an average of 16% more on healthcare than families with 75% coverage, 22% more than families with 50% coverage, and 58% more than families with 5% coverage.

• The increased spending that occurred under the plans with higher coverage had "little or no" effect on health outcomes except for the poorest 6% of the population.[12]


* A study published in the American Journal of Public Health (2001) analyzed insurance coverage levels and health outcomes of "an older, chronically ill population." Per the study:


We found no association between cost sharing and health status at baseline or follow-up. Other studies of cost sharing examining acutely ill individuals have also failed to observe any negative health effect from cost sharing.[13]


* U.S. law promotes and subsidizes third-party payments by:


• making employer-provided health insurance generally exempt from federal taxes but not medical expenses paid directly by consumers unless they exceed 7.5% of their income.[14]

• providing health insurance for 47 million elderly and disabled Americans through the Medicare program.[15]

• paying for healthcare services for more than 68 million low-income people through the Medicaid program.[16] [17]

• subsidizing health insurance for 7.7 million children in families with incomes as high as $89,400 for a family of four in New York (income thresholds vary depending upon size of family and state of residence) through the Children's Health Insurance Program (CHIP).[18] [19] [20] [21]


* Starting in 2014, the 2010 Affordable Care Act (a.k.a Obamacare[22]) promotes and subsidizes third-party payments by:


• requiring most Americans to carry some form of health insurance or pay a monthly fine.[23] [24]

• expanding Medicaid eligibility by increasing income thresholds. The U.S. Department of Health and Human Services projects that the Affordable Care Act will increase Medicaid enrollment above previous estimates by 12 million people in 2014 and 20 million people by 2019.[25] [26] [27]

• providing taxpayer subsidies to purchase health insurance for individuals with incomes as high as $104,680 for a family of 5 in 2011 (income thresholds vary depending upon size of family). The U.S. Department of Health and Human Services projects that 25 million people will be receiving these subsidies in 2019.[28] [29] [30]

• increasing the threshold at which medical expenses paid directly by consumers become tax deductible from 7.5% of income to 10%.[31]

 

Wealth


* Among developed nations, greater wealth is associated with higher healthcare spending. The graph below shows healthcare spending and income in 32 developed countries such as Australia, Canada, Germany, and Japan.[32] [33] This graph is cropped to improve data visibility, and thus, does not show the U.S. and Luxembourg, both of which are outliers. Click on the footnote to see an uncropped graph including these countries.

 


[34]


* Per the Handbook of Health Economics, "results obtained with international comparisons should be treated with considerable caution," but a "common and extremely robust result of international comparisons is that the effect of … (income) on [healthcare] expenditures is clearly positive and significant….."[35] [36]

 

Age


* Personal health care expenditures consist of monies directly spent to "treat individuals with specific medical conditions."[37]


* In the U.S. during 2004, the average annual personal healthcare spending per person for 65-74 year-olds was more than three times higher than that of 19-44 year-olds:


Age group (years) Annual personal healthcare

spending per person

0-18 $2,650
19-44 $3,370
45-54 $5,210
55-64 $7,787
65-74 $10,778
75-84 $16,389
85+ $25,691
Average per person $5,276

[38]


* In 2010, for every 4.6 Americans aged 20 to 64, there was one American aged 65 or older. As the baby-boom generation ages and projected life expectancy increases, the Social Security Administration estimates that this ratio will drop to 3.5 to 1 by 2020 and to 2.7 to 1 by 2030.[39] [40]
 

Preventative care


* Per the Congressional Budget Office:


Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall. …


To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. … Judging the overall effect on medical spending requires analysts to calculate not just the savings from the relatively few individuals who would avoid more expensive treatment later, but also the costs for the many who would make greater use of preventive care.[41]


* In 2008, the journal PLoS Medicine published a study on the healthcare costs of obesity and smoking in the Netherlands. The authors found that:


• "overweight and obese individuals have an increased risk of developing many diseases, such as diabetes, coronary heart disease and stroke…."

• "life expectancy at age 20 was five years less for the obese group, and eight years less for the smoking group, compared to the healthy-living group…."

• "because of differences in life expectancy … lifetime health expenditure was highest among healthy-living people and lowest for smokers."[42]


* In 1998, the British Medical Journal published a study examining the cost effectiveness of preventing fatal diseases in the Netherlands. The study found that:


lengthening life generally will increase healthcare needs, particularly needs for long term nursing care as most life years are added to old age. …

 

…. If we eliminate a specific cause of death, we simply die later from another. In the meantime we grow older, become generally more disabled, and need more care.


The study's conclusion states:


The aim of prevention is to spare people from avoidable misery and death not to save money on the healthcare system. In countries with low mortality, elimination of fatal diseases by successful prevention increases healthcare spending because of the medical expenses during added life years.[43]
 

Profits and salaries

 

* From March 2010 through June 2011, the average operating margin (= profit margin before interest expenses and taxes[44]) for all companies in the S&P 500 was 9.0%, while for healthcare companies in the S&P 500, it was 9.3%.[45] [46]


* As of November 17, 2011, the net profit margin (after taxes[47]) for various industries within the healthcare sector are as follows:


Industry

Net Profit Margin
Medical Laboratories & Research 0.8%
Long-Term Care Facilities 0.9%
Hospitals 4.3%
Medical Practitioners 4.3%
Health Care Plans 4.5%
Home Health Care 5.7%
Drugs, Generic 6.0%
Medical Instruments & Supplies 13.6%
Drug Manufacturers, Major 16.7%

[48]


* In May 2010, the mean hourly wage in the United States was $21.35 (not including benefits), and the mean hourly wage for various healthcare occupations was as follows:


Occupation Title Mean Hourly Wage
Pharmacy Technicians $14.10
EMTs and Paramedics $16.01
Registered Nurses $32.56
Physical Therapists $37.50
Chiropractors $38.38
Physician Assistants $41.89
Pharmacists $52.59
Dentists $76.33
Pediatricians $79.67
Psychiatrists $80.58
Family and General Practitioners $83.59
Obstetricians and Gynecologists $101.13
Anesthesiologists $105.82
Surgeons $108.36

[49] [50]

 


Waste, fraud, and abuse


* Per the U.S. Treasury Department, an "improper payment" is


any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments)…. It includes any payment to an ineligible recipient, any payment for an ineligible service, any duplicate payment, payments for services not received….[51]


* Per the U.S. Government Accountability Office, "once fraudulent or improper payments are made, the government is likely to only recover pennies on the dollar."[52]


* In 2008, the Children's Health Insurance Program made $834 million in improper payments (date for later years not yet available). This amounts to 14.7% of the program's total outlays.[53]


* In 2010, the Medicaid program made $22.5 billion in improper payments. This amounts to 9.4% of the program's total outlays.[54]


* In 2010, the Medicare program made about $48 billion in improper payments. This is the highest estimated amount of improper payments in a single federal program. These payments amount to:


• 9.3% of all Medicare outlays.

• 38% of all improper payments reported by 20 federal agencies covering 70 programs.

• $408 per U.S. household.[55]


* A 2009 Medicare fraud investigation by CBS News found that:


• a medical supply company billed Medicare for half a million dollars during a month when CBS couldn't find anyone present at the company's address.

• a pharmacy billed Medicare for $300,000 using an address for a public warehouse storage area.

• a 76-year-old woman had been notifying Medicare for six years that her Medicare statements were showing purchases for medical supplies that she never needed or received.[56]


* Per the FBI's "2009 Financial Crimes Report":


All health care programs are subject to fraud; however, Medicare and Medicaid programs are the most visible. Estimates of fraudulent billings to health care programs, both public and private, are estimated between three and ten percent of total health care expenditures.[57]



Government shifting costs to private sector


* In 2009, Medicare and Medicaid paid hospitals a combined total of $38 billion dollars less than hospitals' costs of caring for Medicare and Medicaid patients. Medicare paid hospitals an average of 10% below their costs of car­ing for Medicare patients, and Medicaid paid hospitals an average of 11% below their costs of caring for Medicaid patients.[58]


* As of October 2011, four states limit the number of days that Medicaid will pay for hospital stays: 45 days in Florida, 30 days in Mississippi, 24 days in Arkansas, and 16 days in Alabama. Arizona and Hawaii are planning to limit the number of days to 25 and 10 respectively. Spokesmen for hospital associations in Alabama and Arizona have stated that hospitals generally will care for Medicaid patients beyond these time limits regardless of Medicaid's willingness to pay.[59]


* Federal law requires most hospitals with emergency departments to provide an "examination" and "stabilizing treatment" for anyone who comes to such a facility and requests care for an emergency medical condition or childbirth, regardless of their ability to pay and immigration status. This is mandated under a federal law called the Emergency Medical Treatment and Active Labor Act (EMTALA).[60] [61] [62]


* In 2001, emergency room physicians spent about half of their patient-care time providing treatment mandated under EMTALA.[63]


* In 2000, emergency room physicians incurred an average of $138,300 in bad debt by providing treatment mandated under EMTALA. Bad debt does not include charity care or care for which charges were reduced through negotiations. It only includes care for which payment was owed and not received.[64]



Uncompensated care


* "Uncompensated care" is defined as the total cost to health care providers of both charity care and bad debt.[65]


* In 2003, the Federal Reserve reported that approximately 52% of all collection actions by collection agencies and creditors were associated with medical bills.[66]


* In 2009, hospitals provided $39.1 billion of uncompensated care, amounting to 6.0% of hospitals' total costs.[67]

 

Lawsuits and defensive medicine


* In 2009, the costs to the U.S. healthcare system of malpractice awards, lawyers' fees, and lawsuit-related administrative costs were about $30 billion or 1.2% of total healthcare spending.[68] [69] (This does not include the costs of defensive medicine.)


* States and localities have varying legal systems and demographics that drive disparities in medical malpractice costs.[70] For example, in 2009, the lowest-price malpractice insurance provider for OB/GYNs in:


• Los Angeles County, California (the nation's most populous county[71]) charged an average of $49,804 per policy.[72]

• Cook County, Illinois (the nation's second-most populous county[73]) charged an average of $127,083 per policy.[74]

• San Francisco County, California charged an average of $29,635 per policy.[75]

• Adams County, Illinois charged an average of $60,342 per policy.[76] [77]


* "Defensive medicine" is defined by the American Academy of Orthopedic Surgeons as "the practice of ordering excessive or unnecessary tests, procedures, visits, or consultations solely for reducing liability risk to the physician, and/or avoidance behavior, the practice of avoiding high-risk patients or procedures."[78]


* A nationwide survey of 462 physicians conducted in 2009/2010 by Gallup and Jackson Healthcare found that 73% of doctors engaged in some form of defensive medicine over the past 12 months. On average, the physicians who practiced defensive medicine estimated that 21% percent of their practice was defensive in nature.[79]

 

Administration and regulations


* Examples of administrative and regulatory policies that impact healthcare costs include:


• paperwork and billing procedures required by private insurers and government programs.[80] [81]

• government directives and reporting requirements.[82] [83]

• mandates that require insurers to cover the cost of specific treatments and providers.[84]

• mandates that prohibit insurers from charging copayments for certain classes of services and drugs.[85]

• FDA drug and medical device approval processes.[86] [87]

• a Medicare/Medicaid requirement that requires hospitals to provide translators for patients who don't speak English under certain circumstances.[88] [89]

• mandates that require insurers to pay for health conditions that existed before customers purchased insurance.[90]

• state regulations that prohibit residents from buying health insurance in other states.[91]

• licensing, certification, and audit requirements for healthcare facilities and professionals.[92] [93] [94] [95]


* A 2001 study conducted by PricewaterhouseCoopers for the American Hospital Association chronicled more than 40 layers of paperwork associated with caring for a typical Medicare patient who arrives at an emergency room with a broken hip and receives treatment until recuperation.[96] Some of the findings are:


• Roughly 60 minutes of paperwork were performed for every hour of emergency department care, 36 minutes of paperwork for every hour of surgery and acute inpatient care, 30 minutes of paperwork for every hour of skilled nursing care, and 48 minutes of paperwork for every hour of home health care.[97]

• "Each time a physician orders a test or a procedure, the physician documents the order in the patient's record. But the government requires additional documentation to prove the necessity for the test or procedure."[98]

• "Many forms … must be completed daily by clinical staff to submit to the government to justify the care provided to skilled nursing facility patients."[99]

• Medicare and Medicaid "rules and instructions" are more than 130,000 pages (three times larger than the IRS code and its associated regulations), and "medical records must be reviewed by at least four people to ensure compliance" with Medicare program requirements.[100]

• "A Medicare patient arriving at the emergency department is required to review and sign eight different forms—just for Medicare alone."[101]

• In addition to regulation by state and local agencies and private accrediting organizations, hospitals are regulated by nearly 30 federal agencies.[102]


 Government Programs


Mandatory spending


* In 2010, 37% of all federal revenues were spent on "mandatory" healthcare programs.[103] Mandatory programs are those that can spend taxpayer money without Congress passing annual spending bills. The major mandatory healthcare programs are Medicare, Medicaid, the Children's Health Insurance Program, and beginning in 2014, a new entitlement established under the 2010 Affordable Care Act (details below).[104] [105]


* In 2011, the Congressional Budget Office projected how much money the federal government will spend on mandatory healthcare programs over coming years under "current policy" with a sustained economic recovery.[106] This scenario assumes that:


• unemployment gradually declines to its approximate historical average and stays there.[107] [108]

• federal revenues (as a portion of the economy) gradually rise to their approximate historical average and stay there.[109]

• Medicare payments for healthcare services don't undergo reductions scheduled under current law that would cause "severe problems with beneficiary access to care."[110] [111]


Under this scenario, the Congressional Budget Office projects that the share of federal revenues spent on mandatory healthcare programs will increase from 5% in 1970, 14% in 1990, and 37% in 2010—to 50% in 2030, 71% in 2050, and 100% in 2080.

 


[112]

 

Medicare


* The Medicare program was founded in 1965 to provide health insurance for people aged 65 and older. It was later expanded to cover younger people who are permanently disabled.[113] [114]


* In 2010, Medicare provided health insurance for almost all Americans aged 65 and over (roughly 39 million people) and about 7 million permanently disabled individuals under the age of 65.[115] In total, these Medicare enrollees represent about 15% of the U.S. population.[116]


* Medicare provides coverage for hospital and physicians services, skilled nursing facility care (not custodial care[117]), hospice care, and prescription drugs.[118] [119] [120]


* In 2010, Medicare spent about $523 billion.[121] This amounts to 14% of all federal expenditures and 21% of all federal revenues.[122]


* In 2009, Medicare payment rates for inpatient hospital services were 67% of private health insurance payment rates,[123] and Medicare paid hospitals an average of 10% below their costs of caring for Medicare patients.[124]


* People who are aged 20-64 are known as the "primary working-age population."[125] When Medicare began funding healthcare for seniors in 1966, there were 5.5 Americans in their primary working years for every American aged 65 or older. By 2012, this ratio had declined by 20%. As the baby-boom generation matures and projected life expectancy increases,[126] the Social Security Administration projects that this ratio will decline by 36% by 2020 and by 50% by 2030:

 


[127]


* When Medicare was established in 1965, life expectancy for 65-year-old Americans was 12.9 years for males and 16.3 years for females. By 2010, these figures had risen to 17.5 years for males and 19.9 years for females. This amounts to an increase of 4.6 years for males and 3.6 years for females.[128]


* According to Social Security Administration projections, by 2030 life expectancy for 65-year-old Americans will rise to 19.2 years for males and 21.1 years for females. This amounts to an increase since 1965 of 6.3 years for males and 4.8 years for females.[129]


* The 2011 Medicare Trustees Report projects the future finances of the Medicare program based upon high, low, and intermediate-cost assumptions.[130] Per the intermediate assumptions, the Medicare program faces a $24.2 trillion ($24,200,000,000,000) actuarial deficit over the next 75 years (in 2011 dollars). The report states that the resources needed to cover this deficit "would be in addition to the payroll taxes, benefit taxes, and premium payments scheduled under current law."[131]


* The annual Medicare Trustees Report makes financial projections based upon current law.[132] Per the 2011 report:


• "there is a significant likelihood that the projected" Medicare "expenditures are substantially understated as a result of potentially impracticable elements of current law."

• "an almost 30 percent reduction in Medicare payment rates for physician services is assumed to be implemented in 2012 as required under current law, despite the virtual certainty that Congress will override this reduction."

• the Affordable Care Act eventually reduces "Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services" to "less than half of their level under the prior law. …. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. … [This] would lead to far higher costs for Medicare in the long range than those projected under current law."[133]

 

Medicaid


* The Medicaid program was founded in 1965 to pay for healthcare services for "certain low-income persons in the United States and its Territories."[134] [135]


* In 2010, about 68 million people received Medicaid benefits during some point in the year. This figure, which excludes U.S. territories, represents about 22% of the U.S. population.[136] [137] [138]


* States are not required to participate in the Medicaid program, but all choose to do so. Within certain federal guidelines, states have latitude in setting eligibility criteria, deciding which healthcare services to cover, and regulating payments to doctors and other healthcare providers.[139] [140]


* An example of a federal guideline is that all participating states must provide Medicaid coverage for pregnant women and children in families with income below 133% of the federal poverty level.[141] In 2011, 133% of the federal poverty level for a family of four was $29,725.[142]


* In most states, non-disabled, non-pregnant adults who don't have dependent children are not eligible for Medicaid. For such adults who do have dependent children, the Medicaid eligibility income threshold varies widely across states, but the median was 64% of the federal poverty level in January 2011.[143] For a family of four, this amounts to $14,304.[144]


* Starting in 2014, the 2010 Affordable Care Act (a.k.a. Obamacare[145]) requires all states to expand Medicaid coverage to all individuals under the age of 65 in families with incomes below 138% of federal poverty guidelines without regard for any assets they have.[146] [147] In 2011, 138% of the federal poverty level was $30,843 for a family of four.[148]


* The U.S. Department of Health and Human Services projects that the Affordable Care Act will increase Medicaid enrollment above previous estimates by about 20 million people by 2019.[149] [150]

 

* The portion of the U.S. population receiving Medicaid benefits has increased from 6.5% in 1970 to 16.8% in 2010, and based upon projections from federal actuaries, this figure will rise to 22.9% by 2019:

 

[151]


* Per the Congressional Research Service, "compared to both Medicare and employer-sponsored health care plans," Medicaid "offers the broadest array of medical care and related services available in the United States today."[152]


* Medicaid-covered services vary by state and include items such as ambulance transportation, chiropractic care, dental care, eyeglasses, physician services, hospital services, substance abuse rehabilitation, nonemergency medical transportation, personal care, prescription drugs, and private duty nursing.[153] [154]


* Per the U.S. Centers for Medicare and Medicaid Services:


Beneficiary cost sharing, such as deductibles or co-payments, and beneficiary premiums are very limited in Medicaid and do not represent a significant share of the total cost of health care services for Medicaid enrollees.[155]


* From January 2006 through May 2009, a Medicaid enrollee in Buffalo, NY used an ambulance service 603 times at no cost to him, costing taxpayers at least $118,158.[156]


* Medicaid expenditures are funded by federal and state general revenues.[157] The portion of Medicaid expenditures paid by the federal versus state governments varies by state. The federal government pays a greater share of Medicaid costs for states with lower average income levels.[158]


* There is no dollar limit on the federal funds states may receive for their Medicaid programs. Thus, as states provide more generous Medicaid benefits, they receive more funding from the federal government.[159] [160] [161]


* In 2010, Medicaid spent about $405 billion. This amounts to 10% of all federal and state government spending combined and 14% of all federal and state revenues combined.[162]


* Illegal immigrants are not eligible for standard Medicaid coverage but can receive Medicaid coverage for emergency conditions including childbirths.[163] [164]


* In 2009, 74% of all babies delivered at Parkland Memorial Hospital in Dallas, Texas were born to women who were noncitizens.[165]


* In 2008, Medicaid paid for 14.7% of all healthcare spending in the U.S., 5.9% of dental spending, 7.3% of spending on physicians, 8.3% of spending on drugs, 17.1% of hospital spending, 34.7% home health spending, and 40.6% of nursing home spending.[166] [167]


* In 2007, 52% of all childbirths in New York City were paid for by Medicaid.[168]


* Depending upon the state of residence, as of 2011, Medicaid will pay 100% of nursing home costs for individuals who have up to:


• $758,000 in home equity (or unlimited equity if a spouse lives in the home),

• one car (regardless of value),

• $109,560 in other financial assets, and

• $32,868 per year in personal income (or unlimited spousal income).[169]


* In 2009, Medicaid payment rates for physician services were 58% of private health insurance payment rates. (For comparison, Medicare payment rates for physician services were 80% of private health insurance payment rates.")[170]


* Per the 2011 Medicare Trustees Report, low Medicaid payment rates for health care services "have already led to access problems for Medicaid enrollees."[171]


* A survey conducted by the Center for Studying Health System Change found that "about half of physicians reported accepting all new Medicaid patients in 2004-05, compared with more than 70 percent for Medicare and privately insured patients."[172]

 

CHIP


* The Children's Health Insurance Program (CHIP) was established via federal law in 1997 to help states provide health insurance to uninsured, low-income children living in families with income above Medicaid eligibility limits.[173]


* Like Medicaid, the federal and state governments share in the cost for CHIP, and states have latitude in setting eligibility criteria and deciding which healthcare services to cover. Depending upon the state, the federal government paid between 65% to 83% of CHIP costs in 2010.[174] [175]


* In 2016-2019, the 2010 Affordable Care Act raises the share of CHIP paid by the federal government by 23 percentage points per state, up to a maximum of 100%.[176]


* The legislation that created CHIP states that the "purpose" of the program is to provide "child health assistance to uninsured, low-income children … under 19 years of age … whose family income is at or below 200 percent" of the federal poverty line.[177] In 2011, 200% of the federal poverty level for a family of four was $44,700.[178]


* By 2007, 13 states had exercised waivers to expand CHIP coverage to various adults,[179] and 15 states used a provision of the law that allows states to disregard certain types of income to raise the effective income limit above 200% of the poverty level. The state of New Jersey effectively raised this limit to 350% by disregarding all income between 200% and 350% of the poverty level.[180] In 2011, 350% of the federal poverty level for a family of four was $78,225.[181]


* In January 2011, states had income eligibility limits for CHIP ranging from 160% of the federal poverty level ($35,760 for a family of four) in North Dakota to 400% of the federal poverty level ($89,400) in New York. The median income limit was 250% of the federal poverty level or $55,875.[182]


* As of January 2011, 47 states have no limit on the assets a family may have and still be eligible for CHIP.[183] [184]


* In 2010, 7.7 million children were enrolled in CHIP during some point in the year.[185] [186]


* Laws passed in 2009 and 2010 reauthorize and increase CHIP funding for upcoming years through 2015.[187] The 2009 law also made legal immigrants immediately eligible for CHIP, overriding a previous requirement of a five-year waiting period.[188]

 

 Politics

 
1990s


* Medicare payroll taxes (which amount to 2.9% of workers' wages[189] [190]) were previously limited by a wage threshold that generally increased as the national average wage increased. Earnings above this threshold were not subject to the Medicare payroll tax. In 1993, this threshold was $135,000 per year.[191] [192] That year, Congress and Democratic President Bill Clinton passed a law that removed the threshold, thus making all earnings subject to Medicare payroll taxes.[193] The bill passed with 85% of Democrats voting for it and 100% of Republicans voting against it.[194]


* The same 1993 bill imposed a new Medicare tax on Social Security beneficiaries with incomes above certain limits. This tax is levied on the Social Security benefits of individuals if the total of one-half of their benefits and all other income is more than $34,000 per year ($44,000 if married and filing jointly).[195] [196] This threshold is not indexed for inflation or wage growth.[197]


* In 1997, Congress and President Clinton passed a law that created the Children's Health Insurance Program (CHIP). The legislation appropriated between $3.1 billion and $5.0 billion per year for the program during 1998-2007.[198] [199] The bill passed with 84% of Republicans and 78% of Democrats voting for it.[200]

 

2000s
 

* In 2003, Congress and Republican President George W. Bush passed a law adding a prescription drug benefit to the Medicare program.[201] [202] The bill passed with 88% of Republicans voting for it and 89% of Democrats voting against it.[203] The Congressional Budget Office (CBO) estimated it would add $395 billion to the deficit over the following ten years.[204]


* The Democratic Congressional Campaign Committee later described the Republican-passed Medicare prescription drug benefit as "costly."[205] When this bill was being debated, 86% of House Democrats voted for a competing plan that the CBO estimated would add $969 billion to the deficit over the following ten years, or 2.4 times more than the Republican plan.[206] [207]


* In 2009, Congress and Democratic President Barack Obama passed a law that:


• appropriated $10.6 billion of federal funding for CHIP in 2009, $12.5 billion in 2010, $13.5 billion in 2011, and $15.0 billion in 2012.[208] [209] [210]

• made legal immigrants immediately eligible for CHIP, overriding a previous requirement of a five-year waiting period.[211]

• financially incentivized states to eliminate or streamline asset tests for CHIP eligibility.[212] [213]

• increased taxes on tobacco products.[214]


* The bill passed Congress with 99% of Democrats voting for it and 77% of Republicans voting against it.[215]

 

2010 Affordable Care Act


* In 2010, Congress and President Obama passed two laws that are collectively known as the Affordable Care Act (ACA). Formally, these bills are called the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act. Informally, these bills are called Obamacare. The bills were passed separately for the political/procedural reasons detailed in this footnote.[216]


* These bills passed Congress with 79-89% of Democrats voting for them and 100% of Republicans voting against them.[217] [218] Together, the bills contain 1,935 pages.[219] [220]


* The Affordable Act (ACA):


• expands Medicaid eligibility to all individuals under the age of 65 in families with incomes below 138% of federal poverty guidelines (for example, a family of four with income below $30,843 in 2011) without regard for any assets they have. This expansion, along with other measures in the act, are projected by the U.S. Department of Health and Human Services to increase Medicaid enrollment above previous estimates by about 11.6 million people in 2014 and 20 million people by 2019. This provision becomes effective in 2014.[221] [222] [223]


• incrementally cuts Medicare prices "for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services" over the next 75 years to "less than half of their level under the prior law." The U.S. Centers for Medicare and Medicaid Services projects that by 2085, Medicare payment rates for inpatient hospital services will be roughly 33% of private health insurance payment rates. The 2011 Medicare Trustees Report states that these cuts will likely cause "withdrawal of providers from the Medicare market" and "severe problems with beneficiary access to care…."[224] [225]


• establishes a board of 15 Senate-confirmed Presidential appointees that is required to limit Medicare spending for years in which the Medicare chief actuary projects that the program will not meet its cost-savings targets.[226] [227] This board is called the "Independent Payment Advisory Board" (IPAB),[228] and the law states that:

- the board's proposals automatically acquire the force of law unless Congress passes bills to override these proposals, and the president signs the bills.[229] [230] In the case of a presidential veto, Congress can still override these proposals, but this requires a two-thirds majority vote in both houses of Congress.[231]

- the board can function with only one of its 15 seats filled,[232] and if the board does not submit a proposal by the required deadline, the Secretary of Health and Human Services (a presidential appointee[233]) has the power to submit a proposal in its place.[234]

- the board cannot "ration health care,"[235] [236] [237] but the determination of what constitutes rationing is left to the board's discretion because the board's decisions are not subject to administrative or judicial review.[238] [239]


• expands funding for the Children's Health Insurance Program by $29 billion dollars over 2012-2015.[240]


• provides subsidies to purchase health insurance for individuals with incomes up to 400% of federal poverty guidelines (for example, $74,120 for a family of three in 2011, $89,400 for a family of four, or $104,680 for a family of five). The U.S. Department of Health and Human Services projects that 25 million people will be receiving these subsidies in 2019. The subsidy levels will be based upon income, and the Congressional Budget Office projects that the average subsidy will be $4,610 per enrollee when the program begins in 2014.[241] [242] [243] [244]


• imposes fines on large employers that don't provide full time-employees with health insurance that meets certain requirements. This begins in 2014.[245] [246] Per the chief actuary of the Centers for Medicare and Medicaid Services, the fines would generally be "substantially less than the cost of providing health insurance coverage."[247]


• requires most Americans to carry some form of health insurance starting in 2014 or to pay a monthly fine.[248] [249] Per the chief actuary of the Centers for Medicare and Medicaid Services, "for many individuals the applicable penalty would be considerably smaller than the cost of coverage."[250] [251]


• requires health insurers to enroll all applicants regardless of their health status/preexisting conditions and to charge them the same rates as healthy individuals who have been paying insurance premiums for years. The law also requires health insurers to enroll all applicants with no more than a 90-day waiting period. This begins in 2014, except for enrollees under the age of 19, for which it began in 2010.[252] [253]


• prohibits the sale of health insurance policies that have:

- annual or lifetime limits on the amount of coverage provided.

- premiums based upon any risk factors except for age, tobacco use, the area in which consumers live, and whether the plan covers an individual or family.

- copayments for any approved preventive health services or items.

- coverage for dependents that doesn't include unmarried children through the age 26.

These provisions begin in 2011-2014.[254] [255] [256]


• gives presidential appointees, such as the Secretary of Health and Human Services,[257] at least 40 regulatory powers that have the force of law.[258] [259]


• creates roughly 45 new governmental boards, councils, committees, and commissions in addition to an unknown number of other entities such as trust funds, programs, systems, and risk pools.[260]


• imposes or increases 10 types of taxes, fees, and penalties (not including the fines described above for not having or providing health insurance). Congress's Joint Committee on Taxation projects that these provisions will increase tax collections by $361 billion during 2010-2019.[261]


* During the debate over the Affordable Care Act, Republicans proposed more than a hundred amendments to the legislation, most of which were rejected by the Democrats, who were in the majority at the time.[262] Examples of rejected amendments include:


• making health insurance tax-deductible for individuals (like it is for businesses) and making other healthcare expenses tax deductible.[263]

• repealing the Independent Payment Advisory Board.[264]

• requiring recipients of federally funded healthcare benefits to demonstrate their identity and citizenship.[265]

• repealing the mandate that forces people to purchase health insurance or to pay a fine.[266]

• allowing consumers to purchase health insurance across state lines.[267]

• a provision that states, "Nothing in this Act shall be construed to prevent or limit individuals from keeping their current health coverage."[268]


* Per government data, federal spending is projected to increase by $438 billion during 2010-2019 as a result of the Affordable Care Act.[269] During the same period, federal revenues are projected to increase by $579 billion.[270] [271]


* The totals above net to a $141 billion improvement in the federal government's finances over 2010-2019.[272] This assumes Congress and the President don't override the Medicare cuts, as they are currently doing with the Medicare cuts required under a 1997 law.[273] [274] This improvement in federal finances also assumes that a new program created by the law called the CLASS Act is operational.


* The CLASS Act is a long-term care insurance program that was championed by Democratic Senator Ted Kennedy and included in the Affordable Care Act.[275] The program is voluntary and financed by participant premiums, not federal subsidies.[276]


* Premiums for students and individuals with incomes below the poverty line are initially fixed at $5 per month, and the premiums of other participants are set at levels adequate to cover the cost of the program.[277]


* During the debate over the CLASS Act, Republican Senator Judd Gregg was successful in adding an amendment that required the program to be financially sound.[278] [279]


* In April 2010, the chief actuary of the Centers for Medicare and Medicaid Services issued a report stating that the CLASS Act and programs like it


face a significant risk of failure as a result of adverse selection by participants. Individuals with health problems or who anticipate a greater risk of functional limitation would be more likely to participate than those in better-than-average health. … The problem of adverse selection is intensified by requiring participants to subsidize the $5 premiums for students and low-income enrollees. … [T]here is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.[280] [281]


* Because the CLASS Act was projected to collect more money in insurance premiums than it paid in benefits during its early years, the federal government projected it would reduce the budget deficit during 2010-109 by $38 billion. However, over the long term, the program was projected to result in more costs than revenues.[282]


* In October 2011, the Obama administration announced it will not be implementing the CLASS Act because there is no viable way to make the program financially sound, as required by Senator Gregg's amendment.[283] [284] [285]


NOTE (1/23/2012): Since the passage of the Affordable Care Act, numerous reports have emerged about changes in healthcare costs, insurance rates, insurance coverage, and other matters relating to Barack Obama's recurring promise that "you will be able to keep your doctor" and "your health care plan."[286] Given that the act passed in 2010, and most healthcare data for 2011 is not yet available, there is not enough data for Just Facts to cover these issues within our mission statement's directive to provide facts "that accurately convey big-picture realities." We plan to provide facts on these issues as such data becomes available, first through our Just Facts Daily initiative and later through a major update of this research.

 

 Media

 
Health insurance profits


* From 2007 through 2010, the annual portion of total private health insurance company revenues paid out in healthcare benefits for customers ranged from 87% to 89%.[287] [288] The remainder went to profits, taxes on premiums, and administrative expenses such as employee salaries and benefits, office space and furniture, computers, utilities, property taxes and insurance, sales commissions, advertising, legal fees, and audit fees.[289] [290] [291]


* From 2007 through 2010, the annual median net profit margin for the ten largest health insurance/managed care companies ranged from 2% to 4%. Throughout this period, the highest profit margin made by any of these companies in any year was 7%.[292] [293]


* In 2009, CNN uncritically reported the following statement about the healthcare debate by Senate Majority Leader Harry Reid:


There is no business in America that makes more money than the insurance industry.[294]


* In 2008 (later data not available), the health insurance/managed care industry had a 2.2% net profit margin, which ranked 35th out of 53 top industries. The industry with the highest profit margin was network/communications equipment, which had a 20.4% profit margin.[295] [296]


* In 2009, the following interchange occurred on NBC:


Chris Matthews (MSNBC host):


I'd regulate the insurance companies like public utilities, and squeeze them down to a reasonable profit level. Why don't they do that? That's the solution.


Katty Kay (BBC's Washington correspondent):


Well, you'd stop the insurance companies making outrageous profits.[297]


* As of January 2012 (earlier data not available), health insurance companies had a 4.5% quarterly net profit margin, as compared to 6.9% for electric utilities, 8.2% for gas utilities, and 12.0% for water utilities.[298]


* In 2010 on NPR's All Things Considered, reporter Julie Rovner stated:


Critics, of course, point out that unlike automakers, many health insurance companies are earning huge profits these days, even while raising premiums.[299]


* As of January 2012 (earlier data not available) health insurance companies had a 4.5% quarterly net profit margin, as compared to 2.9% for major auto manufacturers, 5.9% for auto parts, 9.9% for restaurants, 20.3% for beverage brewers, and 23.2% for application software.[300]


* In May 2011, the New York Times published a story by Reid Abelson stating:


The nation's major health insurers are barreling into a third year of record profits, enriched in recent months by a lingering recessionary mind-set among Americans who are postponing or forgoing medical care. …


Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends.[301]


* As of January 2012 (earlier data not available), health insurance companies had a 4.5% quarterly net profit margin, as compared to 2.9% for the New York Times Company,[302] 5.2% for music & video stores, 9.7% for toys & games, 14.0% for wireless communications, and 53.1% for periodical publishers.[303]

 

Uninsured Americans


* In September 2011:


American Medical News (a publication of the American Medical Association), published an article by Doug Trapp stating:


The number of uninsured Americans grew by nearly 1 million between 2009 and 2010 to reach 49.9 million.[304]


• the American Public Health Association [APHA] issued the following statement from its interim executive director, Alan Baker:


According to data released today by the U.S. Census Bureau … 49.9 million Americans are uninsured, which increased slightly from 49 million in 2009. … On behalf of the entire public health community, APHA calls on Congress to fully implement and fund the main public health and coverage provisions included in the Affordable Care Act that take effect in 2014.[305]


• the New Jersey Star Ledger published an article stating:


The number of uninsured Americans grew by nearly 1 million between 2009 and 2010 to reach 49.9 million.[306]


• the New York Times editorial board wrote:


Nearly one million more Americans went without health insurance in 2010 than in 2009. This distressing news is further evidence of the need for government safety net programs and the national health care reforms that will take effect mostly in 2014. The Census Bureau reported this week that the number of uninsured people rose to 49.9 million last year, up from 49 million the previous year.[307]


* None of the above-cited articles or editorials mentioned the following facts, which are contained in the Census Bureau survey they cited:


• 19% of the 49.9 million uninsured "Americans" were noncitizens,

• 37% had annual household income above $50,000,

• 19% had annual household income above $75,000,[308] and

• "underreporting of health insurance coverage appears to be a larger problem" in this survey "than in other national surveys that ask about insurance."[309]


* A study that cross-checked respondents from the above-referenced survey with data from the Centers for Medicare and Medicaid Services found that in 2005, about 18% of the "uninsured" in this survey actually had insurance through Medicaid.[310] [311]

 
Footnotes


[1] Calculated with data from:


a) Dataset: "National Health Expenditures by Type of Service and Source of Funds, Calendar Years 1960-2009." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, January 5, 2011. https://www.cms.gov/...


b) Dataset: "Consumer Price Index, All Urban Consumers (CPI-U), U.S. City Average, All items." U.S. Department of Labor, Bureau of Labor Statistics, September 15, 2011. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt


c) Table 1.1.5: "Gross Domestic Product." United States Department of Commerce, Bureau of Economic Analysis. Last revised August 26, 2011. http://www.bea.gov/...


NOTE: An Excel file containing the data and calculations is available upon request.


[2] Calculated with data from:


a) Dataset: "National Health Expenditures by Type of Service and Source of Funds, Calendar Years 1960-2009." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, January 5, 2011. https://www.cms.gov/...


b) Dataset: "Consumer Price Index, All Urban Consumers (CPI-U), U.S. City Average, All items." U.S. Department of Labor, Bureau of Labor Statistics, September 15, 2011. ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt


c) Table 1.1.5: "Gross Domestic Product." United States Department of Commerce, Bureau of Economic Analysis. Last revised August 26, 2011. http://www.bea.gov/...


NOTE: An Excel file containing the data and calculations is available upon request.


[3] Receipt: Christ Hospital, 176 Palisade Avenue, Jersey City, NJ, 1942.


Service

Price ($)
Hospital room ($7.00 per day) 70.00
Operating Room Fee (Baby circumcision) 5.00
Laboratory Fee 1.00
Maternity Room 15.00
Care of Baby 7.50
Total 98.50
Special Allowance -33.50
Balance 65.00


NOTE: Just Facts has examined the original receipt and scanned a copy of it. We are not publishing this image because it contains personal information.


[4] "CPI Inflation Calculator." Bureau of Labor Statistics. Accessed October 12, 2011 at http://www.bls.gov/data/inflation_calculator.htm


"$7.00 in 1942 has the same buying power as $97.29 in 2011"


[5] Email: Christ Hospital, 176 Palisade Avenue, Jersey City, NJ, September 23, 2011.


For a normal vaginal delivery (limit of 2 days) the fee for the hospital service will be $4000.00. Any additional days over the normal 2 day stay will incur a charge of $1360.00 per day.


For a cesarean section delivery (limit of 4 days) the fee for the hospital service will be $5565.00. Any additional days over the normal 4 day stay will incur a charge of $1360.00 per day.


This quoted price is for a standard Vaginal Delivery/Cesarean Section and normal newborn birth barring any unforeseen complications which could add to this billable amount.


* This amount is payable in full prior to discharge.


* A $500.00 deposit is required at time of pre-registration.


* Patient Access staff will flag your account when they obtain your demographic information in order to insure a smooth admission process.


* The above amounts do not include physician fees, anesthesia, or any other professional component.


[6] Article: "70% Rise in Hospital Room Costs Since 1980." Associated Press, November 5, 1986. http://www.nytimes.com/...


"The average daily cost of hospital rooms jumped nearly 70 percent over the last five years, from $127 in 1980, according to statistics published by the Census Bureau. The figures were drawn from data compiled by the Health Insurance Association of America and the American Hospital Association."


NOTE: Just Facts searched the websites of the Census Bureau, Health Insurance Association of America [now America's Health Insurance Plans], and the American Hospital Association for up-to-date data on the average price of hospital rooms, but we were unable to find such information. Just Facts also contacted the American Hospital Association, which was unable to provide any data beyond 2002. This data is cited in footnotes below.


[7] "CPI Inflation Calculator." Bureau of Labor Statistics. Accessed October 12, 2011 at http://www.bls.gov/data/inflation_calculator.htm


"$127.00 in 1980 has the same buying power as $349.17 in 2011"


[8] Webpage: "Hospital Patient Price Information." Ohio Hospital Association. Accessed October 30, 2011 at http://www.ohiohealthcareguide.org/patient_price.htm


"In compliance with state law, each Ohio hospital provides a price list containing its charges for room and board, emergency department, operating room, delivery, physical therapy and other procedures. The hospital's charges are the same for all patients, but a patient's responsibility may vary, depending on payment plans negotiated with individual health insurers."


NOTE: Just Facts used a random number generator (http://www.randomizer.org/form.htm) to select 15 of the 168 hospitals listed on this web page. We found price lists for 11 of these 15 hospitals. Many of the links on this webpage were broken, some of these links did not directly point to pricing information, and several hospitals had their price lists located in obscure locations on their websites.


Hospital Price Type of Room
Mercy Willard Hospital N/A  
Mount Carmel St. Ann's $630 Routine care
Mercy St. Anne Hospital N/A  
Trumbull Memorial Hospital N/A  
Bay Park Community Hospital $2,223 Medical/surgical private (no option for routine care or semi-private)
Upper Valley Medical Center $2,135 Routine Care
Parma Community General Hospital $910 Routine care, multiple patient room
Fairview Hospital $1,444 Medical/surgical
University Hospitals Rainbow Babies & Children's Hospital $2,425 Semi-Private - Med/Surg/CF
Springfield Regional Medical Center - High St. Campus $688 Routine care
Grady Memorial Hospital $958 Routine care – semi
Grand Lake Health System $928 $455 Routine care + $473 Average Nursing Care†
Greene Memorial Hospital $1,322 Semi Private Routine Care
The Toledo Hospital N/A  
University Hospitals Case Medical Center $1,655 Semi-Private Standard
Average $1,393  
Median $1,322  
† Book: Current Trends in Health Care and Dental Costs Utilization. Mutual of Omaha, 2003. Page 3: "The average room and board charges … include charges for nursing care for those facilities with separate room and board charges from nursing charges."


[9] Calculated with the dataset: "National Health Expenditures by Type of Service and Source of Funds, Calendar Years 1960-2009." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, January 5, 2011. https://www.cms.gov/...


NOTE: An Excel file containing the data and calculations is available upon request.


[10] Article: "Nonprice Competition in Hospitals." By John L. Mariotti. Encyclopedia of Health Care Management. Edited by Michael J. Stahl. Sage Publications, 2004.


Page 391: "In conclusion, because most medical care is delivered with third-party payments, and the purchaser is in dire need of the services, the typical patient has little interest in price. The result is that most medical care is bought on decision criteria other than price. Thus, nonprice competition seems to be the norm, not only in hospitals but also in a wide range of health and medical services."


[11] "CPI Inflation Calculator." Bureau of Labor Statistics. Accessed October 25, 2011 at http://www.bls.gov/data/inflation_calculator.htm


"$1,000 in 1974 has the same buying power as $4,602 in 2011"


"$1,000 in 1982 has the same buying power as $2,351 in 2011."


CALCULATION (to obtain an average of the figures above): ($4,602 + $2,351)/2 = $3,476


[12] Paper: "Some Interim Results from a Controlled Trial of Cost Sharing." By Joseph P. Newhouse and others. Rand, January 1982. http://www.rand.org/pubs/reports/2006/R2847.pdf

Page iii: "[T]he first regular sample [of study participants] was enrolled in late 1974. Most participants have now completed their period of participation, and all will complete it by January 1982."


Page v:


A total of 7706 participants in six cities have taken part in a controlled experiment related to cost sharing in health insurance polices. …


The families were assigned in an unbiased manner to insurance plans that covered a broad range of medical services but varied the coinsurance rate, i.e., the fraction of its medical bills that the family must pay. This out-of-pocket expenditure was subject to an upper limit of $1000 per year or 5, 10, or 15% of income, whichever was less. …


Expenditure per person responds to variation in cost sharing. It is about 50 percent greater in the plan with no cost sharing [100% coverage] than in the one with 95-percent coinsurance [5% coverage] up to a maximum of $1000 in any one year. ..


As cost sharing declines, the percentage of individuals seeking care rises, as does the number of ambulatory [outpatient] visits per user. The number of adults hospitalized increases, but the number of children hospitalized shows no systematic relationship to plan. Cost per person hospitalized does not appear to be related to plan.


Pages v-vi: "The implications of these findings are that: 1) Cost sharing unambiguously reduces expenditure; it is not "penny-wise and pound-foolish" (with respect to expenditure) as some have argued."


Page 4: "A total of 2756 families, consisting of 7706 persons, have been enrolled in one of several different health insurance plans, 70 percent of them for 3 years and the rest for 5 years. … Families were excluded in which heads were eligible for Medicare at the beginning of the study (or who would become so by virtue of age before the end of the study). Hence, our results do not necessarily apply to the aged population.


Pages 12, 15:


Per capita total expenditure (inpatient plus ambulatory [outpatient], excluding dental and outpatient mental health services) rises steadily as coinsurance falls (Table 3). Expenditure per person in the plan with no coinsurance (the most generous plan) is about 60-percent greater than in the plan with 95-percent coinsurance [5% coverage]….


Although the simple arithmetic mean provides acceptable precision for analyzing ambulatory expenditure, it does not do so for plan-related differences in total expenditure…. This lack of precision occurs because a few large medical expenditures account for a substantial portion of all expenditures on a given plan and can therefore affect the average quite dramatically….


Application of techniques better suited to such data yields a somewhat different, but probably more reliable, estimate of what per person expenditure would be if a larger number of families had been enrolled. … Averaged across all sites, predicted expenditure per person in the 95-percent coinsurance plan is 69 percent of that in the free care plan; in other words, free care causes expenditures to increase by nearly 50 percent (Table 5). … In some site-years, the predicted expenditure for the 50-percent coinsurance plan was smaller than that of the 95-percent coinsurance plan, but the difference is statistically insignificant. This misordering appears to be attributable to the sampling error, given the relatively few participants enrolled in the 50-percent coinsurance plan.


Page 13: "Table 3 - Actual Annual Total and Ambulatory Expenditure Per Person, By Plan: Nine Site-Years"


Plan Total Expenditure† Free Plan $ Increase
Free care $401 (±52) 0%
75% coverage $346 (±58) 16%
50% coverage $328 (±149) 22%
5% coverage $254 (±37) 58%
† 95-percent confidence intervals are shown in parentheses.

NOTE: Just Facts has extracted, simplified, and systematized

data from this table to make it more understandable.


Page 23:


Our results clearly show that the use of medical services responds to cost sharing; demand in an insurance plan with full coverage appears to be about 50 percent above that in an income-related catastrophe insurance plan [i.e., 5% coverage]. The fragmentary evidence now in the literature is roughly consistent with this value; e.g., the 25-percent decline in visits observed in a natural experiment among Stanford University employees when their coinsurance rate was changed from zero to 25 percent … is similar to the 20-percent decline in ambulatory expenditures between the zero and 25-eprcent coinsurance plans (Table 3).

 

NOTE: The effects of cost sharing on health outcomes is detailed in the book: Free for All? Lessons from the Rand Health Insurance Experiment. By Joseph P. Newhouse and the Insurance Experiment Group. Rand, 1993. Pages 339-340:


The reduced service use under the cost-sharing plans had little or no net adverse effect on health for the average person (Chapters 6 and 7.) Indeed, restricted activity days fell with more cost sharing.


Health among the sick poor—approximately the most disadvantaged 6 percent of population—was adversely affected, however. In particular, the poor who began the Experiment with elevated blood pressure had their blood pressure lowered more on the free plan than on the cost-sharing plans. The effect on predicted mortality rates—a fall of about 10 percent—was substantial for this group. In addition, free care marginally improved both near and far corrected vision, primarily among the poor, and increased the likelihood that a decayed tooth would be filled—an effect found disproportionately among the less well educated. Health of gums was marginally better for those with free care. And serious symptoms were less prevalent on the free plan, especially for those who began the experiment poor and with serious symptoms. Finally, there appeared to be a beneficial effect on anemia for poor children. Although sample sizes made it impossible to detect any beneficial effects that free care might have had on relatively rare conditions, it is highly improbable that there were beneficial effects (one standard error of the mean changes) that we failed to detect in the physiologic measures of health taken as a group. Moreover, the confidence intervals are tight enough to rule out any beneficial effect of free care on the General Health Index, our best summary measure of health.


[13] Paper: "Effects of Cost Sharing on Care Seeking and Health Status: Results From the Medical Outcomes Study." By Mitchell D. Wong and others. American Journal of Public Health, November 2001. http://www.naic.org/...


Page 1889:


[W]e analyzed data from the Medical Outcomes Study, which prospectively followed chronically ill adults, to determine whether cost sharing deters use of care and leads to subsequent worse health outcomes among a population whose health may be more vulnerable to use disincentives. …


… [A]dults with 1 or more chronic illnesses were followed over 4 years. …


We analyzed data from the 1700 (67%) subjects who completed the 12- and 18-month surveys, which assessed individuals' level of cost sharing and use of medical care.


Page 1890: "[W]e collapsed individuals into 3 cost-sharing categories: no copay (insurance pays all), low copay (insurance pays more than half but not all), and high copay (insurance pays half or less). Using insurance and employment data, we conducted logistic regression analyses to impute missing data on level of cost sharing for 92 (5.4%) subjects."


Pages 1892-1893:


Previous studies have demonstrated little or no impact of cost sharing on health outcomes, but these studies have not primarily involved individuals who are chronically ill and, thus, particularly vulnerable. In contrast, the Medical Outcomes Study was designed to examine an older, chronically ill population and involved subjects who had diabetes, hypertension, coronary artery disease, congestive heart failure, or depression. In addition, 46% of these subjects were older than 62 years (the upper age cutoff for inclusion in the RAND Health Insurance Experiment). We hypothesized that cost sharing would have a significant negative impact on health status in this sample owing to the subjects' advanced age and greater disease burden.


We found no association between cost sharing and health status at baseline or follow-up. Other studies of cost sharing examining acutely ill individuals have also failed to observe any negative health effect from cost sharing.9,27 This lack of finding is particularly surprising given that the RAND Health Insurance Experiment involved a comparatively younger and healthier population and revealed a small yet statistically significant effect on health. One explanation may be related to the influence of income on the effect of cost sharing. Health Insurance Experiment subjects who were in the lowest income category suffered the worst health outcomes due to cost sharing. Others have also shown that the health of the poor is particularly sensitive to limitations in access to care.11,28,29 Therefore, we may have failed to observe an association between cost sharing and worse health because subjects in the Medical Outcomes Study had relatively high incomes.


The time frame of our analysis may not have been optimal to detect a negative impact on health outcomes. The RAND Health Insurance Experiment demonstrated that cost sharing had its greatest impact through lowering use of general health examinations and preventive care.1 The effect on an individual's health of receiving less preventive care would probably be delayed. Thus, the 1-year follow-up in our analysis may have been too brief. In addition, we observed subjects after they had already been exposed to cost sharing for some time, and thus cost sharing may have already affected their health by the time of our study. Consequently, the study may have been biased owing to a survival effect.


[14] Publication 502: "Medical and Dental Expenses." U.S. Internal Revenue Service, 2010. http://www.irs.gov/pub/irs-pdf/p502.pdf


Page 2:


What Are Medical Expenses?


Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.


Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.


Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.


Page 3:


How Much of the Expenses Can You Deduct?


You can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 7.5% of your AGI (Form 1040, line 38).


In this publication, the term "7.5% limit" is used to refer to 7.5% of your AGI. The phrase "subject to the 7.5% limit" is also used. This phrase means that you must subtract 7.5% (.075) of your AGI from your medical expenses to figure your medical expense deduction.


Example.


Your AGI is $40,000, 7.5% of which is $3,000. You paid medical expenses of $2,500. You cannot deduct any of your medical expenses because they are not more than 7.5% of your AGI.


[15] Report: "Medicare Primer." By Patricia A. Davis. Congressional Research Service, July 1, 2010. http://aging.senate.gov/crs/medicare1.pdf


Page 1: "Part A (Hospital Insurance, or HI) covers inpatient hospital services, skilled nursing care, and home health and hospice care. The HI trust fund is mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between employers and workers."


Page 1: "Medicare serves approximately one in seven Americans and virtually all of the population aged 65 and over. In 2010, the program will cover an estimated 47 million persons (39 million aged and 8 million disabled)."


Page 4: "Most persons aged 65 or older are automatically entitled to premium-free Part A because they or their spouse paid Medicare payroll taxes for at least 40 quarters (10 years) on earnings covered by either the Social Security or the Railroad Retirement systems. Persons under age 65 who receive cash disability benefits from Social Security or the Railroad Retirement systems for at least 24 months are also entitled to Part A."


[16] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Summary:


In existence for 45 years, Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term care to more than 68 million people in FY2010. …


Each state designs and administers its own version of Medicaid under broad federal rules. State variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered.


Page 1: "Even though Medicaid is an entitlement program in federal budget terms, states choose whether to participate, and all 50 states do so."


Pages 1-2:


The federal Medicaid statute … defines more than 50 distinct population groups as being potentially eligible. Historically, Medicaid eligibility was subject to categorical restrictions that generally limited coverage to the elderly, persons with disabilities … members of families with dependent children, certain other pregnant women and children, certain women with breast or cervical cancer, and uninsured individuals with tuberculosis. Recent changes in law (described below) provide eligibility for nonelderly, childless adults who do not fit into these traditional categories.


In addition, to qualify for Medicaid coverage, applicants' income (e.g., wages, Social Security benefits) and sometimes their resources, or assets (e.g., value of a car, savings accounts), must meet program financial requirements. … In recent years, Medicaid has shifted largely to eligibility based on income, and most enrollees do not receive cash assistance. …


Some eligibility groups are mandatory, meaning that all states with a Medicaid program must cover them; others are optional. Examples of groups that states must provide Medicaid to include: …


• pregnant women and children through age 18 with family income below 133% of the federal poverty level (FPL),6


6 For example, in 2010, the FPL for a family of four is $22,050—133% of FPL for such a family would equal $29,326.50. See http://aspe.hhs.gov/poverty/09extension.shtml.


[17] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 133% = $29,725


[18] Report: "Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA." By Julie Stone and others. Congressional Research Service, April 28, 2010. http://hrsa.dshs.wa.gov/MedicaidHealthCareReform/CRS/CHIPProvisions.pdf


Page 49: "CHIP provides health care coverage to low-income, uninsured children in families with income above Medicaid income standards. States may also extend CHIP coverage to pregnant women when certain conditions are met. In designing their CHIP programs, states may choose to expand Medicaid, create a stand-alone program, or use a combined approach."

 

[19] Dataset: "Chip Ever Enrolled in Year." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, February 1, 2011. https://www.cms.gov/...


"2010 [=] 7,705,723 … CHIP Data represents children enrolled in Separate Child Health Programs and Medicaid Expansion Programs (Title XXI)"


[20] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 400% = $89,400


[21] Report: "Holding Steady, Looking Ahead: Annual Findings Of A 50-State Survey Of Eligibility Rules, Enrollment and Renewal Procedures, And Cost Sharing Practices in Medicaid and CHIP, 2010-2011." By Martha Heberlein and others. Kaiser Commission on Medicaid and the Uninsured, January 2011. http://www.kff.org/medicaid/upload/8130.pdf


Pages 29-30: "Table 1 - Upper Income Eligibility Limit for Children's Coverage and Program Type - January 2011 … New York … Upper Income Limit2 (Percent of the FPL) [=] 400 … 2 The income eligibility levels noted may refer to gross or net income depending on the state and reflect the highest income eligibility level in the state using Medicaid/CHIP funds."


Pages 31-32: "Table 7 - Streamlined Application Requirements for Children's Health Coverage - January 2011 … Asset Test NOT Required … CHIP …. New York"


[22] NOTE: The Affordable Care Act is actually comprised of two acts,† which were passed separately for political/procedural reasons.‡


† Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf


Page ii: "In this report, 'recently enacted health care legislation' refers to the Patient Protection and Affordable Care Act (Public Law 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152)."


‡ Article: "Healthcare Reform Legislation Signed Into Law." By Jerry Klepner and Briana Nord. Dialysis & Transplantation, June 18, 2010. http://onlinelibrary.wiley.com/doi/10.1002/dat.20455/full


[N]egotiations on a final bill were stalled when, on January 19 [2010], Republican Scott Brown was elected to the Massachusetts Senate seat vacated by the death of Senator Edward Kennedy. Brown's election effectively took away the Senate Democratic leadership's 60th vote in support of healthcare reform legislation. Without the filibuster-proof 60 votes in the Senate, Democrats would not have been able to overcome the procedural hurdles to passing a final House-Senate compromise bill without Republican votes. …


The White House and House and Senate Democratic leadership agreed on a two-step process in which the House would pass the Senate-approved healthcare reform bill and then vote on a package of changes to the bill negotiated by Democrats in both chambers. Under budget reconciliation, the Senate would be able pass the package of changes with a simple majority vote [i.e., 50 votes instead of 60].


[23] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Page 6: "Beginning in 2014, PPACA [the Patient Protection and Affordable Care Act] includes a mandate for most individuals to have health insurance,9 or potentially pay a penalty for noncompliance.10 Individuals will be required to maintain minimum essential coverage for themselves and their dependents. Those who do not meet the mandate will be required to pay a penalty for each month of noncompliance."


[24] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActurialStudies/downloads/PPACA_2010-04-22.pdf


Page 6: "The penalty amounts for noncovered individuals will be indexed over time by the CPI (or, in certain instances, by growth in income) and would normally increase more slowly than health care costs."


[25] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 2: "Beginning in 2014, the Affordable Care Act expands Medicaid eligibility to all individuals under age 65 in families with income below 138 percent of the Federal Poverty Level (FPL).22 … The Affordable Care Act technically specifies an upper income threshold of 133 percent of the FPL but also allows a 5-percent income disregard, making the effective threshold 138 percent."


Page 28:


The effective participation rate of persons who would have been uninsured for a full year, but are newly eligible for Medicaid as a result of the Affordable Care Act, is assumed to be 97 percent. This assumed participation rate is significantly higher than actual Medicaid participation rates to date and is based on the anticipated impacts of sections of the Affordable Care Act intended to make the process of enrolling easier. In particular, the legislation establishes State or federally operated health insurance exchanges that, among other responsibilities, will facilitate the determination of individuals' and families' eligibility for Federal financial assistance for health insurance, either through Medicaid or through the Federal premium and cost-sharing subsidies for private health insurance plans. The exchanges are assumed to perform this role effectively and, for those found to qualify for Medicaid, to assist the application and enrollment process. In this role, the exchanges would also serve as a valuable new resource for health providers who seek assistance in enrolling eligible persons in Medicaid. In addition, we anticipate that the more widespread availability of financial assistance under the Affordable Care Act (for individuals and families with incomes up to 400 percent of FPL) will reduce any stigma associated with receipt of such assistance through Medicaid.


Page iv:


The most significant change to Medicaid is the expansion of Medicaid eligibility beginning in 2014. This expansion, together with greater participation by individuals eligible under current rules, is projected to add 11.6 million people to enrollment in FY [fiscal year] 2014 and almost 20 million people by FY 2019, 21 percent and 34 percent, respectively, compared to pre-Affordable Care Act estimates. These increases reflect both the greater proportion of the population that will be eligible for Medicaid and an assumption that the new State health insurance exchanges will be very effective in assisting enrollment in Medicaid. Of the new enrollees … about 78 percent are projected to be eligible only under the new rules beginning in 2014.


[26] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 138% = $30,843


[27] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


Page 162 (in pdf):


TITLE II—ROLE OF PUBLIC PROGRAMS

Subtitle A—Improved Access to Medicaid …

SEC. 2002. INCOME ELIGIBILITY FOR NONELDERLY DETERMINED USING MODIFIED GROSS INCOME. …

(C) NO ASSETS TEST.—A State shall not apply any assets or resources test for purposes of determining eligibility for medical assistance under the State plan or under a waiver of the plan.


[28] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Summary: "[The Affordable Care Act] will enable and support states' creation by 2014 of "American Health Benefit Exchanges." … Based on income, certain individuals may qualify for a tax credit toward their [health insurance] premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange."


[29] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 5: "The refundable premium tax credits in … [the Affordable Care Act] would limit the [health insurance] premiums paid by individuals with incomes up to 400 percent of the FPL [Federal Poverty Level] to a range of 2.0 to 9.5 percent of their income and would cost an estimated $451 billion through 2019. An estimated 25 million Exchange enrollees (79 percent) would receive these Federal premium subsidies."


NOTE: Although the statement above does not explicitly designate the year in which 25 million Exchange enrollees receive subsidies, the year can be deduced by data in Table 2 (on page 24 of the pdf file). For the year 2019, this table specifies 31.6 million Exchange enrollees. As explained above, "79 percent" of these would receive subsidies. Since 79% of 31.6 million equals 25.0 million, the year 2019 is implied above.


[30] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 3 … 48 Contiguous States and D.C. [=] $18,530 … Alaska [=] $23,160 … Hawaii [=] $21,320"

CALCULATION: $18,530 × 400% = $74,120


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"

CALCULATION: $22,350 × 400% = $89,400


"Persons in Family [=] 5 … 48 Contiguous States and D.C. [=] $26,170 … Alaska [=] $32,720 … Hawaii [=] $30,100"

CALCULATION: $26,170 × 400% = $104,680


[31] Report: "Prescription for change 'filled': Tax provisions in the Patient Protection and Affordable Care Act, Updated to reflect changes approved in the Reconciliation Act of 2010." Deloitte, March 30, 2010. http://www.deloitte.com/...


Page 21: "The Act increases the threshold for claiming an itemized deduction for unreimbursed medical expenses for regular tax purposes from 7.5 percent of the taxpayer's AGI to 10 percent. The Act does not change the current-law 10 percent of AGI threshold that applies under the alternative minimum tax. Effective date – The change generally applies for taxable years beginning after December 31, 2012. For any taxpayer who is age 65 and older or whose spouse is 65 or older, the threshold for regular tax purposes remains at 7.5 percent until 2017."


[32] Webpage: "List of OECD Member countries - Ratification of the Convention on the OECD." Organization for Economic Cooperation and Development. Accessed May 8, 2013 at http://www.oecd.org/...


"Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea [South], Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States"


[33] Book: Beyond Economic Growth: An Introduction to Sustainable Development, Second Edition. By Tatyana P. Soubbotina. World Bank, 2004. http://www.worldbank.org/depweb/english/beyond/beyondco/beg_all.pdf


Pages 132-133:


Developed countries (industrial countries, industrially advanced countries). High-income countries, in which most people have a high standard of living. Sometimes also defined as countries with a large stock of physical capital, in which most people undertake highly specialized activities. According to the World Bank classification, these include all high-income economies except Hong Kong (China), Israel, Kuwait, Singapore, and the United Arab Emirates. Depending on who defines them, developed countries may also include middle-income countries with transition economies, because these countries are highly industrialized. Developed countries contain about 15 percent of the world's population. They are also sometimes referred to as "the North."


Page 141:


Organisation for Economic Cooperation and Development (OECD). An organization that coordinates policy among developed countries. OECD member countries exchange economic data and create unified policies to maximize their countries' economic growth and help nonmember countries develop more rapidly. The OECD arose from the Organisation for European Economic Cooperation (OEEC), which was created in 1948 to administer the Marshall Plan in Europe. In 1960, when the Marshall Plan was completed, Canada, Spain, and the United States joined OEEC members to form the OECD.


[34] Graph constructed with data from:


a) Dataset: "Health expenditure, total (% of GDP)." World Health Organization supplemented by country data. Accessed October 28, 2011 at http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS

"Total health expenditure is the sum of public and private health expenditure. It covers the provision of health services (preventive and curative), family planning activities, nutrition activities, and emergency aid designated for health but does not include provision of water and sanitation."


b) Dataset: "GDP per capita (current US$)." World Bank and OECD. Accessed October 28, 2011 at http://data.worldbank.org/indicator/NY.GDP.PCAP.CD/countries

"GDP at purchaser's prices is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Data are in current U.S. dollars. Dollar figures for GDP are converted from domestic currencies using single year official exchange rates. For a few countries where the official exchange rate does not reflect the rate effectively applied to actual foreign exchange transactions, an alternative conversion factor is used."


NOTE: An Excel file containing the data is available upon request.



[35] Book: Handbook of Health Economics, Volume 1A. Edited by Anthony J. Cuyler & Joseph P. Newhouse. Elsevier, 2000. Chapter 1: "International Comparisons of Health Expenditure." By Ulf-G. Gerdtham, Bengt Jönsson. Pages 11-53.


Pages 19-20:


[R]igorous assessment of the quality (accuracy and reliability) of the cross-national data is difficult. … There is ample scope for imperfect reliability with respect to international comparisons due to differential classification, especially on the borderline of health services such as care for the aged. For example, the care of the mentally retarded in not included in the expenditure for Denmark nor for Sweden after 1985, but it is included in the expenditure for Finland, Iceland and Norway. Another difference is that local nursing homes are not included in the Danish statistics, whereas they were included in Finland, Iceland, Norway and Sweden before 1992…. Thus heterogeneous definitions are present even if one selects apparently similar countries such as the Nordic countries…. Taken together, these problems indicate that results obtained with international comparisons should be treated with considerable caution.[35]


Page 45: "A common and extremely robust result of international comparisons is that the effect of per capita GDP (income) on expenditures is clearly positive and significant and, further, that the estimated income elasticity† is clearly higher than zero and close to unity or even higher than unity. This result appears to be robust to the choice of variables included in the estimated models, data, the choice of conversion factors and methods of estimation."


NOTE:

† Income elasticity is the "proportionate change in the demand for a good in response to a change in income. It is reflected in how people change their consumption habits with changes in their income levels. In a growing economy (where income levels are rising) goods whose demand is highly income-dependent will sell more than the goods whose demand is not income-dependent. For example, demand for staple food items normally does not increase with higher income levels; but demand for gourmet food or restaurant food does increase as individual's income grows. Also called income sensitivity of demand, it is mathematically expressed as percent change in quantity demanded ÷ percent change in income." [Entry: "income elasticity of demand." BusinessDictionary.com. Accessed October 28, 2011 at http://www.businessdictionary.com/....]


[36] Book: Health Economics: Theories, Insights, and Industry Studies, Fifth edition. By Rexford E. Santerre and Stephen P. Neun. South-Western, Cenage Learning, 2010.


Page 131:


The empirical estimates for the income elasticity of demand vary widely and merit discussion. Studies using household, or individual, data generally find healthcare to be a normal good with income elasticity below 1.0. These results are in direct contrast to studies that utilize country-level data to look at the relation between income and health care expenditures either over time or across countries. The goal of these studies is to ascertain how economic growth impacts national health care expenditures. Generally, these studies find the aggregate income elasticity to be slightly above 1. …


This difference between the micro and macro estimates is interesting and deserves explanation. According to Newhouse, the difference exists, because, for example, within the United States at any point in time the average consumer pays only a small portion of the price of medical care (approximately 14 percent in 2003), while over time the country as a whole must pay the full price of health care. As the out-of-pocket price of health care are falls to zero, then the average individual is going to consume health care regardless of income. The income elasticity in the extreme equals zero. The country, as a whole, however, must face the entire burden of the cost of health care and, as a result, is going to be much more sensitive to price and income.


[37] Report: "National Health Expenditures Accounts: Definitions, Sources, and Methods, 2009." U.S. Department of Health & Human Services. http://www.cms.gov/NationalHealthExpendData/downloads/dsm-09.pdf


Page 4:


National Health Expenditures represents health care spending in the aggregate. The NHEA recognize several types of health care spending within this broad aggregate. "Personal Health Care Expenditures" (PHC) measures the total amount spent to treat individuals with specific medical conditions. "Health Consumption Expenditures" (HCE) represents spending for all medical care rendered during the year, and is the sum of personal health care expenditures, government public health activity, and government administration and the net cost of private health insurance. National Health Expenditures (NHE) equals Health Consumption Expenditures plus Investment, or the sum of medical sector purchases of structures and equipment and expenditures for noncommercial medical research.


Page 6: "Personal health care goods and services comprise all of the medical goods and services that are rendered to treat or prevent a specific disease or condition in a specific person. These include hospital, professional services, other health, residential, and personal care, home health, nursing care facilities and continuing care retirement communities, and the retail outlet sales of medical products (Exhibit 3)."


[38] Dataset: "Personal Health Care Spending by Age Group and Type of Service, Calendar Year 2004." From the paper: "U.S. Health Spending By Age, Selected Years Through 2004." By Micah Hartman and others. Health Affairs, November 2007. https://www.cms.gov/...


[39] Report: "CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Page 7:


The retirement of the large baby-boom generation born between 1946 and 1964 portends a long-lasting shift in the age profile of the U.S. population. That shift will substantially alter the balance between the working-age and retirement-age segments of the population. During the next decade alone, the number of people over the age of 65 is expected to rise by more than a third. Over the longer term, the share of people age 65 or older is projected to grow from about 13 percent now to 20 percent in 2035, whereas the share of people ages 20 to 64 is expected to fall from 60 percent to 55 percent. In later decades, the aging of the population is expected to continue, though at a slower rate, because of further increases in life expectancy.


[40] Calculated with data from Table V.A2: "Social Security Area Population as of July 1 and Dependency Ratios, Calendar Years 1941-2090." United States Social Security Administration, Office of the Chief Actuary, May 31, 2013. http://www.ssa.gov/OACT/TR/2013/lr5a2.html

 

NOTE: An Excel file containing the data and calculations is available upon request.

 

[41] Letter: Douglas W. Elmendorf (Director, Congressional Budget Office) to Nathan Deal (Ranking Member, Subcommittee on Health, Committee on Energy and Commerce, U.S. House of Representatives). Congressional Budget Office, August 7, 2009. http://www.cbo.gov/ftpdocs/104xx/doc10492/08-07-Prevention.pdf


[42] Paper: "Lifetime Medical Costs of Obesity: Prevention No Cure for Increasing Health Expenditure." By Pieter H. M. van Baal and others. PLoS Medicine, February 2008. Pages 0242-0249. http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050029


Page 0249:


Compared to people with a healthy weight (a BMI between 18.5 and 25), overweight and obese individuals have an increased risk of developing many diseases, such as diabetes, coronary heart disease and stroke, and tend to die younger. …


… life expectancy at age 20 was 5 years less for the obese group, and 8 years less for the smoking group, compared to the healthy-living group….


Page 0242: "Until age 56 y, annual health expenditure was highest for obese people. At older ages, smokers incurred higher costs. Because of differences in life expectancy, however, lifetime health expenditure was highest among healthy-living people and lowest for smokers."


Page 0245: "Table 1. Life Expectancy (Years) and Expected Lifetime Health-Care Costs per Capita … at 20 Years of Age for the Three Cohorts … Expected remaining lifetime health-care costs (× €1,000) [in thousands of Euros] at age 20 … Obese Cohort [=] 250 [thousand Euros] … 'Healthy-Living' Cohort [=] 281 [thousand Euros] … Smoking Cohort [=] 220 [thousand Euros]"


CALCULATIONS:

(281 – 250) / 250 = 12.4%

(281-220) / 220 = 27.7%


[43] Paper: "Preventing fatal diseases increases healthcare costs: cause elimination life table approach." By Luc Bonneux and others. British Medical Journal, January 3, 1998.


Page 26:


In a previous study all healthcare costs in the Netherlands in 1988 (… for 14.8 million inhabitants) were allocated to age, sex, health- care sector, and primary diagnosis on the basis of comprehensive data on morbidity, mortality, and direct costs. … To calculate the effect of eradication, a specific disease was eliminated both as cause of death and as cause of costs: the cause elimination life table recalculates life expectancy and life time expected costs as if the eliminated disease had never existed.


Pages 27-28:


Our analysis shows that lengthening life generally will increase healthcare needs, particularly needs for long term nursing care as most life years are added to old age. This is not a bad thing; prevention can hardly be blamed if it reaches its target and lowers mortality. …


Eliminating causes in a life table demonstrates an unquestionable truth: we all have to die. If we eliminate a specific cause of death, we simply die later from another. In the meantime we grow older, become generally more disabled, and need more care.9 In the Netherlands, cardiovascular diseases and cancer were jointly responsible for nearly 70% of all deaths, yet accounted for a mere 17% of all healthcare costs, whereas the largely non-fatal diseases of the brain, joints, and bones, causing under 2% of all deaths, generated 35% of all costs (see 1).


Page 26: " Conclusion: The aim of prevention is to spare people from avoidable misery and death not to save money on the healthcare system. In countries with low mortality, elimination of fatal diseases by successful prevention increases healthcare spending because of the medical expenses during added life years."


NOTE: Credit for bringing this paper to attention belongs to Sally C. Pipes [Book: The Top Ten Myths of American Health Care: A Citizen's Guide. Pacific Research Institute, 2008. http://www.pacificresearch.org/docLib/20081020_Top_Ten_Myths.pdf]


[44] Book: The Essentials of Finance and Budgeting. Harvard Business School Publishing, 2005. Page 47:


OPERATING MARGIN  Also known as the earnings-before-interest-and-taxes (EBIT) margin, the operating margin is used by many analysts to gauge the profitability of a company's operating activities. The ratio removes from the equation the interest expenses and taxes over which current management may have no control. Thus, operating margin gives a clearer indication of management performance. To calculate the operating margin, use this formula: Operating Margin = EBIT / Net Sales


[45] Calculated with data from the report: "S&P Indices." By Howard Silverblatt. Standard and Poors, November 15, 2011. http://www.standardandpoors.com/...


NOTES:

- NOTE: The key data is located in the worksheet entitled "SALES."

- An Excel file containing the data and calculations is available upon request.


[46] Web page: "S&P 500." Standard and Poors. Accessed November 18, 2011 at http://www.standardandpoors.com/...


"The S&P 500® has been widely regarded as the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index has over US$ 4.83 trillion benchmarked, with index assets comprising approximately US$ 1.1 trillion of this total. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities."


[47] Book: The Essentials of Finance and Budgeting. Harvard Business School Publishing, 2005. Page 33:


Revenues - Expenses = Net Income (or Net Loss)


An income statement starts by showing the company's revenues: the amount of money that resulted from selling products or services to customers. A company may have other revenues as well. In many cases, these additional revenues derive from investments or interest income from the firm's cash holdings.


Various costs and expenses—from the costs of making and storing a company's goods, to depreciation of plant and equipment, to interest expense and taxes—are then deducted from revenues. The bottom line—what's left over—is the net income, or net profit or net earnings, for the period covered by the income statement.


Pages 47-48: "PROFIT MARGIN  The profit margin—sometimes called return on sales, or ROS—indicates a rate of return on sales. It tells us what percentage of every dollar of sales makes it to the bottom line. Calculate the profit margin as follows: Profit Margin = Net Income / Net Sales"


[48] Dataset: "Healthcare Sector." Yahoo! Finance. Accessed November 18, 2011 at http://biz.yahoo.com/p/5qpmu.html


Variable: "Net Profit Margin % (most recent quarter)"


[49] Dataset: "May 2010 National Occupational Employment and Wage Estimates." U.S. Department of Labor, Bureau of Labor Statistics. Last Modified April 6, 2011. http://www.bls.gov/oes/current/oes_nat.htm


[50] Web page: "Technical Notes for May 2010 OES Estimates." U.S. Department of Labor, Bureau of Labor Statistics. Last modified May 17, 2011. http://www.bls.gov/oes/current/oes_tec.htm


The Occupational Employment Statistics (OES) survey is a semiannual mail survey measuring occupational employment and wage rates for wage and salary workers in nonfarm establishments in the United States. …


Wages for the OES survey are straight-time, gross pay, exclusive of premium pay. Base rate; cost-of-living allowances; guaranteed pay; hazardous-duty pay; incentive pay, including commissions and production bonuses; and tips are included. Excluded are overtime pay, severance pay, shift differentials, non-production bonuses, employer cost for supplementary benefits, and tuition reimbursements.


[51] "2010 Financial Report of the United States Government." U.S. Department of the Treasury, December 21, 2010. http://www.fms.treas.gov/fr/10frusg/10frusg.pdf


Page 245:


The federal government continues to make progress under the requirements of the Improper Payments Information Act of 2002 (IPIA)39 in reporting on the nature and extent of improper payments.40


39Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002), as amended by the Improper Payments Elimination And Recovery Act of 2010, Pub. L. No. 111-204, 124 Stat. 2224 (July 22, 2010). The IPIA requires federal executive branch entities to review all programs and activities, identify those that may be susceptible to significant improper payments, estimate and report the annual amount of improper payments for those programs, and implement actions to reduce improper payments.


40IPIA defines an improper payment as any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. It includes any payment to an ineligible recipient, any payment for an ineligible service, any duplicate payment, payments for services not received, and any payment that does not account for credit for applicable discounts.


[52] Report: "Social Security Administration: Cases of Federal Employees and Transportation Drivers and Owners Who Fraudulently and/or Improperly Received SSA Disability Payments." United States Government Accountability Office, June 25, 2010. http://www.gao.gov/new.items/d10444.pdf


Page 44 (General Accounting Office comments on the Social Security Administration's letter dated May 28, 2010):


In the report, we identify those cases where SSA has sent an overpayment notification letter to the individual. However, we do not believe that identifying fraudulent or improper payments after dollars have been disbursed is an effective internal control. Our work across the government has shown that once fraudulent or improper payments are made, the government is likely to only recover pennies on the dollar. Preventive controls are the most efficient and effective.


[53] Calculated with data from "Office of Federal Financial Management Improper Payments Dataset." White House, Office of Management and Budget, January 22, 2010. http://www.whitehouse.gov/omb/financial/improper_payment_dataset


This dataset contains information on improper payment measurements for programs found to be susceptible to significant improper payments under the Improper Payments Information Act of 2002 from FY 2004 – FY 2009. … Amounts included in the dataset are in the millions of dollars (e.g., 500 in the dataset means $500 million).


Information contained in this dataset is also reported individually by agencies in their annual Performance and Accountability Reports and Agency Financial Reports.


NOTE: An Excel file containing the data and calculations is available upon request.


[54] Report: "Status of Fiscal Year 2010 Federal Improper Payments Reporting." United States Government Accountability Office, March 25, 2011. http://www.gao.gov/new.items/d11443r.pdf


Page 12.


[55] Calculated with data from:


a) Dataset: "Average Number of People per Household, by Race and Hispanic Origin, Marital Status, Age, and Education of Householder: 2010." U.S. Census Bureau, November 2010. http://www.census.gov/population/www/socdemo/hh-fam/cps2010.html

Total households = 117,538,000


b) Report: "Improper Payments: Reported Medicare Estimates and Key Remediation Strategies." By Kay L. Daly and Kathleen M. King. United States Government Accountability Office, July 28, 2011. http://www.gao.gov/new.items/d11842t.pdf


Page 1:


In 2010, Medicare covered 47 million elderly and disabled beneficiaries and had estimated outlays of $516 billion, making it one of the largest federal programs. …


For fiscal year 2010, federal agencies reported an estimated $125.4 billion in improper payments, of which Medicare accounts for nearly $48 billion—the highest estimated amount of improper payments in a single program. The Medicare improper payment estimates do not reflect all of the program's risk because HHS [the U.S. Department of Health and Human Services] did not report a total improper payment estimated amount for its Medicare prescription drug benefit program (Part D)."


Page 3: "As shown in figure 1, the Medicare program represents about 38 percent of the $125.4 billion improper payment estimated amount reported by 20 federal agencies covering 70 programs. Further, Medicare's estimated improper payment amount is the highest among all federal programs that reported an estimated amount."


Page 4: "HHS's estimated amount of improper payments for Medicare is incomplete because it has yet to report a comprehensive improper payment estimate for the Medicare prescription drug benefit program, which had reported outlays of about $59 billion in fiscal year 2010."


Pages 4-5:


It is important to recognize that the $48 billion in estimated improper payments reported by HHS in fiscal year 2010 is not an estimate of fraud in Medicare.11 Reported improper payment estimates include many types of overpayments, underpayments, and payments that were not adequately documented. In addition, because the improper payment estimation process is not designed to detect or measure the amount of fraud in Medicare, there may be fraud that exists in the Medicare program that is not included in the reported improper payment estimate.


In addition to inadequate documentation, HHS cited a number of other causes for the estimated $48 billion in reported improper payments, including the provision of services that were found not to be medically necessary, coding errors, incorrect interpretation of data, and payment calculation errors. HHS reported that its analysis showed most Medicare fee-for-service improper payments were for medically unnecessary durable medical equipment and inpatient hospital services. For Medicare Advantage, HHS reported that the majority of the improper payment estimate resulted from insufficient documentation to support the diagnoses submitted by private health plans for payment.


11Fraud consists of intentional acts of deception with knowledge that the action or representation could result in an inappropriate gain.


CALCULATIONS:

$48 billion in improper payments / $516 billion in Medicare outlays = 9.3% improper payment rate


$48,000,000,000 in improper payments / 117,538,000 households = $408 in improper payments/household


[56] Article: "Medicare Fraud: A $60 Billion Crime." CBS News, September 5, 2010. http://www.cbsnews.com/stories/2009/10/23/60minutes/main5414390.shtml


NOTES:

- This article is dated to 9/5/10, but it was first published on 10/23/2009, as evidenced by the date in the url and by the dates of reader comments on the article: http://www.cbsnews.com/...

- Credit for bringing this article and its dating disparity to our attention belongs to Dustin Siggins [Op-ed: "Occupy Debt." By Dustin Siggins and Jonathan Rourke. http://rightwingnews.com/democrats/occupy-debt/]


[57] "2009 Financial Crimes Report." Federal Bureau of Investigation. http://www.fbi.gov/stats-services/publications/financial-crimes-report-2009


[58] Fact sheet: "Underpayment by Medicare and Medicaid." American Hospital Association, December, 2010. http://www.aha.org/content/00-10/10medunderpayment.pdf


Page 1:

 

Each year, the American Hospital Association (AHA) collects aggregate information on the payments and costs associated with care delivered to beneficiaries of Medicare and Medicaid by U.S. hospitals. The data used to generate these numbers come from the AHA's Annual Survey of Hospitals, which is the nation's most comprehensive source of hospital financial data. …


Payment rates for Medicare and Medicaid, with the exception of managed care plans, are set by law rather than through a negotiation process as with private insurers. These payment rates are currently set below the costs of providing care resulting in underpayment.


Page 2:


Underpayment is the difference between the costs incurred and the reimbursement received for delivering care to patients. Underpayment occurs when the payment received is less than the costs of providing care, i.e., the amount paid by hospitals for the personnel, technology and other goods and services required to provide hospital care is less than the amount paid to them by Medicare or Medicaid for providing that care. …


In the aggregate, both Medicare and Medicaid payments fall below costs and the shortfall has been growing.


• Combined underpayments rose from $3.8 billion in 2000 to $36 billion in 2009.

• For Medicare, hospitals received payment of only 90 cents for every dollar spent by hospitals caring for Medicare patients in 2009.

• For Medicaid, hospitals received payment of only 89 cents for every dollar spent by hospitals caring for Medicaid patients in 2009.


[59] Article: "More states limiting Medicaid hospital stays." By Phil Galewitz. USA Today. Updated October 31, 2011. http://www.usatoday.com/...


Rosemary Blackmon, executive vice president of the Alabama Hospital Association, said "for the most part hospitals do what they can" to provide care to Medicaid patients despite the limits.


In Arizona, hospitals won't discharge or refuse to admit patients who medically need to be there, said Peter Wertheim, spokesman for the Arizona Hospital and Healthcare Association. "Hospitals will get stuck with the bill," he said.


[60] United States Code Title 42, Chapter 7, Subchapter XVIII, Part E, Section 1395dd: "Examination and treatment for emergency medical conditions and women in labor." Accessed November 26, 2011 at http://www.law.cornell.edu/uscode/42/1395dd.html


(a) Medical screening requirement

In the case of a hospital that has a hospital emergency department, if any individual (whether or not eligible for benefits under this subchapter) comes to the emergency department and a request is made on the individual's behalf for examination or treatment for a medical condition, the hospital must provide for an appropriate medical screening examination within the capability of the hospital's emergency department, including ancillary services routinely available to the emergency department, to determine whether or not an emergency medical condition (within the meaning of subsection (e)(1) of this section) exists.

(b) Necessary stabilizing treatment for emergency medical conditions and labor

(1) In general

If any individual (whether or not eligible for benefits under this subchapter) comes to a hospital and the hospital determines that the individual has an emergency medical condition, the hospital must provide either—

(A) within the staff and facilities available at the hospital, for such further medical examination and such treatment as may be required to stabilize the medical condition, or

(B) for transfer of the individual to another medical facility in accordance with subsection (c) of this section. …

(e) Definitions

In this section:

(1) The term "emergency medical condition" means—

(A) a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in—

(i) placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy,

(ii) serious impairment to bodily functions, or

(iii) serious dysfunction of any bodily organ or part; or

(B) with respect to a pregnant woman who is having contractions—

(i) that there is inadequate time to effect a safe transfer to another hospital before delivery, or

(ii) that transfer may pose a threat to the health or safety of the woman or the unborn child.

(2) The term "participating hospital" means a hospital that has entered into a provider agreement under section 1395cc of this title.

(3)

(A) The term "to stabilize" means, with respect to an emergency medical condition described in paragraph (1)(A), to provide such medical treatment of the condition as may be necessary to assure, within reasonable medical probability, that no material deterioration of the condition is likely to result from or occur during the transfer of the individual from a facility, or, with respect to an emergency medical condition described in paragraph (1)(B), to deliver (including the placenta).


[61] Report: "EMTALA: Access to Emergency Medical Care." By Edward C. Liu. Congressional Research Service, July 1, 2010. http://aging.senate.gov/crs/medicare20.pdf


Summary:


The Emergency Medical Treatment and Active Labor Act (EMTALA) ensures universal access to emergency medical care at all Medicare participating hospitals with emergency departments. Under EMTALA, any person who seeks emergency medical care at a covered facility, regardless of ability to pay, immigration status, or any other characteristic, is guaranteed an appropriate screening exam and stabilization treatment before transfer or discharge. Failure to abide by these requirements can subject hospitals or physicians to civil monetary sanctions or exclusion from Medicare. Hospitals may also be subject to civil liability under the statute for personal injuries resulting from the violation.


Page 1:


Only hospitals that (1) participate in Medicare and (2) maintain an emergency department are required to screen patients under EMTALA.7


7 … Although the screening and stabilization requirements are phrased such that they apply to "hospitals" generally, enforcement of EMTALA is only authorized against hospitals that have entered into a Medicare provider agreement.


[62] Fact sheet: "Underpayment by Medicare and Medicaid." American Hospital Association, December, 2010. http://www.aha.org/content/00-10/10medunderpayment.pdf


Page 1: "[A]s a condition for receiving federal tax exemption for providing health care to the community, not for profit hospitals are required to care for Medicare and Medicaid beneficiaries. Also, Medicare and Medicaid account for 56 percent of all care provided by hospitals. Consequently, very few hospitals can elect not to participate in Medicare and Medicaid."


[63] Report: "The Impact of EMTALA on Physician Practices." By Carol K. Kane. American Medical Association, February 2003. http://www.ama-assn.org/...


Page 3: "Emergency medicine physicians averaged 22.9 hours of EMTALA mandated care per week, about half of their total patient care hours, and 16.4% of those who provided such care averaged more than 40 hours per week."


[64] Report: "The Impact of EMTALA on Physician Practices." By Carol K. Kane. American Medical Association, February 2003. http://www.ama-assn.org/...


Pages 2-3:


We measure the financial impact of EMTALA on physicians' practices by the amount of bad debt incurred from the provision of EMTALA mandated care. Bad debt is associated with the provision of services for which payment was expected but not received. It is not associated with the provision of charity care for which either no payment is expected, or only payment at a reduced rate. Moreover, bad debt is not associated with the provision of services for which a reduced fee has been negotiated with an insurer. For example, the difference between a physician's usual charge for a certain service and the fee that a Medicaid HMO pays does not amount to bad debt. If, however, a Medicaid HMO patient was obligated to make a copayment and did not, that portion of the bill would be considered bad debt; that payment was expected but not received. …


… Not surprisingly, these figures were largest among emergency medicine physicians, all of whom reported at least some bad debt associated with EMTALA in 2000, with an average of 61.0% of bad debt attributed to that source, or $138,300.


Page 4:


Emergency medicine physicians attributed 61.0% of the bad debt they incurred in 2000 to EMTALA, or $138,300 per year. Across all specialties EMTALA related bad debt amounted to $12,300 per self-employed physician in 2000, or nearly $4.2 billion dollars in the aggregate.


The $4.2 billion estimate likely overstates of the impact of EMTALA on physician net income. First, looking only at the level of bad debt ignores that EMTALA may have had, in part, a positive revenue impact on physicians. If patient volume is greater under EMTALA than it would have been in its absence, to the extent that physicians are able to collect payment for services covered under the scope of EMTALA, revenue from screening and stabilization will be greater than it otherwise would have been. Second, some of the bad debt attributable to EMTALA would have been incurred even in the absence of this legislation—providing screening and stabilization is, after all, the business of hospital EDs [emergency departments].


[65] Fact sheet: "Uncompensated Hospital Care Cost." American Hospital Association, December, 2010. http://www.aha.org/content/00-10/10uncompensatedcare.pdf


Page 1:


Uncompensated care is an overall measure of hospital care provided for which no payment was received from the patient or insurer. It is the sum of a hospital's "bad debt" and the charity care it provides. Charity care is care for which hospitals never expected to be reimbursed. A hospital incurs bad debt when it cannot obtain reimbursement for care provided; this happens when patients are unable to pay their bills, but do not apply for charity care, or are unwilling to pay their bills.


Page 2: "Uncompensated care data are sometimes expressed in terms of hospital charges, but charge data can be misleading, particularly when comparisons are being made among types of hospitals, or hospitals with very different payer mixes. For this reason, AHA data on hospitals' uncompensated care are expressed in terms of costs."


[66] Report: "An Overview of Consumer Data and Credit Reporting." By Robert B. Avery and others. United States Federal Reserve, February 2003. http://www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf


Page 47:


The information gathered by credit reporting companies is vast and seeks to cover virtually all U.S. consumer borrowing.1 To the extent that this information is complete, comprehensive, and accurate, it represents a potential new source of statistical data for the Federal Reserve on consumer credit markets and behavior. …


… The distribution patterns of items such as account balances, credit utilization, and measures of payment performance by type of account and creditor are broadly described. Key aspects of the data that may be incomplete, duplicative, or ambiguous as they apply to credit evaluation are highlighted in the analysis. The article concludes with a discussion of steps that might be taken to address some of the issues identified.


Page 50:


Collection agency reporting does not represent a full accounting of credit accounts that have gone to collection. Many creditors do their own collections rather than using collection agencies. If these creditors report to the credit reporting companies, such collections will appear as updates to credit account files. However, if the creditor does not report to the credit reporting companies, then these collection actions will not appear in the credit files.


Page 69:


The majority of collection actions (about 52 percent) are associated with medical bills. The high incidence of collections related to medical bills is not surprising given both the large number of individual consumers and families that have partial or no health insurance coverage and the high cost of many medical services.29 The second largest category involved collection actions for unpaid bills for utility services, which by the authors' analysis, account for about 23 percent of all collections.


[67] Fact sheet: "Uncompensated Hospital Care Cost." American Hospital Association, December, 2010. http://www.aha.org/content/00-10/10uncompensatedcare.pdf


Page 1: "Each year, the American Hospital Association (AHA) publishes aggregate information on the level of uncompensated care – care provided for which no payment is received – delivered in U.S. hospitals. The data used to generate these numbers come from the AHA's Annual Survey of Hospitals, which is the nation's most comprehensive source of hospital financial data."


Page 4: "National Uncompensated Care Based on Cost*: 1980-2009 (in Billions), Registered Community Hospitals"


Year Hospitals Uncompensated

Care Cost

Portion of

Total Expenses

2009 5008 $39.1 6.0%


[68] Report: "2010 Update on U.S. Tort Cost Trends." Towers Watson, December 2010. http://www.towerswatson.com/...


Page 8:


The methodology used to develop estimates of tort costs in this study is similar to the methodology used in prior Towers Watson studies of U.S. tort costs. This study incorporates three cost components:


• Benefits paid or expected to be paid to third parties (hereafter referred to as "losses")

• Defense costs

• Administrative expenses


Page 17: "Appendix 5 - Medical malpractice tort costs … Total cost … 2009 [=] $ 29,953,137"


[69] Calculated with data from the footnote above and: "National Health Expenditures by Type of Service and Source of Funds, Calendar Years 1960-2009." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, January 5, 2011. https://www.cms.gov/...


"Total National Health Expenditures … 2009 [=] $2,486,293.2 million"


CALCULATION: $45.6 billion / $2,486 billion = 1.8%


[70] Report: "Medical Malpractice Law in the United States." By Peter P. Budetti and Teresa M. Waters. Henry J. Kaiser Family Foundation, May 2005. http://www.kff.org/...


Page 1: "Medical malpractice law in this country traditionally has been under the authority of the states, not the federal government. And, unlike many other areas of the law, the framework and legal rules governing malpractice actions were, prior to the last thirty years, largely established through decisions in lawsuits in state courts rather than through statutes enacted by state legislatures."


Page 4: State legislatures have responded to a number of issues concerning the malpractice tort claims system and passed statutes that changed a number of different aspects of malpractice law, some of which had dramatic effects. Those statutes are often referred to as "tort reforms." More recently, the United States Congress has also considered legislation that would make federal laws more prominent in medical malpractice cases and would override at least some aspects of state laws."


Page 15: "Even when an insurance company sells malpractice insurance in multiple states, premiums are still based on the expected experience of physicians within a single state or an even smaller geographic area. As a result, the differences in medical malpractice law among the states can lead to substantial differences in the cost of malpractice insurance from one state to another, even for the same specialty, and to wide fluctuations from year to year."


[71] Dataset: "Resident Population Estimates for the 100 Largest U.S. Counties Based on July 1, 2009 Population Estimates: April 1, 2000 to July 1, 2009." U.S. Census Bureau. http://www.census.gov/popest/counties/CO-EST2009-07.html


"July 1, 2009 … Rank 1 … Los Angeles County, CA [=] 9,848,011"


[72] Web page: "California Medical Malpractice Insurance." MyMedicalMalpracticeInsurance.com (a division of Cunningham Group). Accessed December 8, 2011 at http://www.mymedicalmalpracticeinsurance.com/...


"2009 … The Doctors Company … OB/GYN … Los Angeles, Orange counties [=] $49,804"


[73] Dataset: "Resident Population Estimates for the 100 Largest U.S. Counties Based on July 1, 2009 Population Estimates: April 1, 2000 to July 1, 2009." U.S. Census Bureau. http://www.census.gov/popest/counties/CO-EST2009-07.html


"July 1, 2009 … Rank 2 … Cook County, IL [=] 5,287,037"


[74] Web page: "Illinois Medical Malpractice Insurance." MyMedicalMalpracticeInsurance.com (a division of Cunningham Group). Accessed December 8, 2011 at http://www.mymedicalmalpracticeinsurance.com/...


"2009 … Medical Protective … OB/GYN … Cook, Madison, St. Clair, Will counties [=] $127,083


[75] Web page: "California Medical Malpractice Insurance." MyMedicalMalpracticeInsurance.com (a division of Cunningham Group). Accessed December 8, 2011 at http://www.mymedicalmalpracticeinsurance.com/...


"2009 … The Doctors Company … OB/GYN … 2009 … Contra Costa, Madera, Mariposa, Merced, Monterey, San Benito, San Francisco counties [=] $29,635"


[76] Web page: "Illinois Medical Malpractice Insurance." MyMedicalMalpracticeInsurance.com (a division of Cunningham Group). Accessed December 8, 2011 at http://www.mymedicalmalpracticeinsurance.com/...


"2009 … American Physicians Assurance Corp … OB/GYN … Adams, Knox, Peoria, Rock Island counties … $60,342"


[77] NOTE: On December 8, 2011, Just Facts contacted MyMedicalMalpracticeInsurance.com to determine the most reliable way to make "apples-to-apples" comparisons between states and localities. Based on this information, Just Facts decided to compare California and Illinois, a high-cost and low-cost state with equal malpractice insurance coverage limits ($1 million per incident and $3 million aggregate per year).†


† Article: "Medical Liability Insurance – Factors That Can Affect What You Pay." By Carol Power. CoverMD. Accessed December 8, 2011 at http://www.covermd.com/...


The most common limit of liability option chosen by doctors is $1 million / $3 million. This is the limit of liability required by most hospitals in order to grant a physician hospital privileges.


The $1 million refers to the amount that the insurance company will pay per Occurrence (per claim) for indemnity purposes and the $3 million is the aggregate (total) amount the insurance company will pay out for a year.


Some states have different limits of liability e.g. in New York it is $1.3 million / $3.9 million, Florida allows $250,000 / $ $750,000 while Texas has a $200,000 / $600,000 limit of liability. Also hospitals in some states require $2 million / $6 million limits of liability in order to grant hospital privileges.


[78] Position Statement: "Medical Liability Reform." American Academy of Orthopaedic Surgeons. Accessed November 28, 2011 at http://www.aaos.org/about/papers/position/1118.asp


Defensive medicine includes assurance behavior, the practice of ordering excessive or unnecessary tests, procedures, visits, or consultations solely for reducing liability risk to the physician, and/or avoidance behavior, the practice of avoiding high-risk patients or procedures.24 With over 120,000 pending liability actions against physicians on any day in the US,25 the threat of frivolous lawsuits places significant pressure on physicians to request or perform unnecessary tests including invasive ones.27,29

 

[79] "Quantifying the Cost of Defensive Medicine: Summary of Findings." Jackson Healthcare, February 2010. http://www.jacksonhealthcare.com/...


Page 1: "Based upon these findings, and in an effort to validate the scope and impact of defensive medicine, Jackson Healthcare retained Gallup to conduct an independent national physician poll using their world-renowned methodology."


Page 2:


Key Findings from Gallup Survey

• Physicians attribute 26 percent of overall healthcare costs to the practice of defensive medicine

• Of the physicians surveyed, 73 percent agreed that they had practiced some form of defensive medicine in the past 12 months

• Physicians indicating they had practiced a form of defensive medicine in the last twelve months attribute 21 percent of their practice to be defensive in nature


Page 4: "Gallup Survey Methodology  Between December 2009 and January 2010, Gallup conducted telephone interviews with 462 randomly selected practicing physicians from across the U.S."


[80] Book: Health Insurance: Current Issues and Background. Edited by William S. Stevens and others. Nova Science Publishers, 2003.


Chapter 2: "The Health Insurance Portability and Accountability Act (HIPPA): Summary of the Administrative Simplification Provisions." By Celinda Franco.


Page 28:


Each year the health care industry generates billions of financial and administrative transactions in both paper and electronic form that result from the delivery of health care services. …


Currently, there are no standardized formats for the electronic or paper transmission of health care information, or standards for identifying providers, health plans, employers, or individuals participating in the health care system. There are approximately 400 formats for electronic health claims used in the United States today. The absence of standardized formats for health care claims means that payers and providers must frequently invest in multiple computer systems or programs, as well as additional human resources in order to process claims with different format requirements. This increases the administrative costs of health care delivery. The lack of standardization limits the efficient flow of information between payers and providers, increases the complexity and costs of processing of health care claims and other financial and administrative transactions, and hinders efforts to direct fraud and abuse.


Page 29: "HIPPA does not, however, provide for the collection of clinical data or the electronic maintenance of patient medical records. As such, HIPPA's overarching goal in this area is to serve as a catalyst for the health care industry to increasingly use electronic transactions and standard formats so that significant administrative savings can be achieved."


NOTE: See the next footnote for information on how the "administrative simplification provisions" in the Health Insurance Portability and Accountability Act are faring in practice.


[81] Letter: Michael D. Maves (Executive Vice President and CEO of the American Medical Association) to Donald Berwick (Administrator, U.S. Centers for Medicare and Medicaid Services), April 13, 2011. http://www.ama-assn.org/...


Page 2: "Drug Plan Authorizations: Despite their ongoing support for Medicare drug coverage, physicians have many complaints about associated burdens, including formulary changes and time-consuming pre-authorization requirements of drug and Medicare Advantage plans. A separate AMA survey found that drug pre-authorizations also delay care with 69 percent of physicians waiting several days for approval and 10 percent waiting more than a week."


Page 5:


In addition, we cannot overemphasize the importance of considering the aggregate impact of the unprecedented scope of changes physicians are being ordered to absorb over a very short period of time. Provisions of one law have not even been implemented before additional requirements are mandated in the next one. Along with the ACA [Affordable Care Act] provisions, physicians are coping with earlier mandates, including most notably the upcoming Health Insurance Portability and Accountability (HIPAA) deadlines for 5010 on January 1, 2012 and ICD-10 on October 1, 2013. To date, there has never been a return on investment for physicians for the implementation of any HIPAA administrative simplification requirement. The human and technological investments needed to participate in quality incentives are competing for physician time and resources needed to move to an enormous new set of diagnosis codes in ICD-10. The struggle to keep up leaves little time to get engaged in the practice redesign and payment and delivery reforms envisioned in the ACA and detracts from patient care just as the ACA is promising access to millions of uninsured Americans. We strongly urge the Administration and CMS to carefully consider the impact the collision of these compliance deadlines will have on physicians, patients and the ACA's promise of better care for more people.


[82] Letter: Michael D. Maves (Executive Vice President and CEO of the American Medical Association) to Donald Berwick (Administrator, U.S. Centers for Medicare and Medicaid Services), April 13, 2011. http://www.ama-assn.org/...


Page 7:


Over the past few years, physicians have experienced tremendous problems with CMS' [Centers for Medicare and Medicaid Services'] enrollment program. These difficulties have led to serious cash flow disruptions for many practices. Some 12 percent of our administrative burden survey respondents found this to have been a problem and one physician told us it "took me eight months to get a Medicare number. I still haven't been paid and will have to take bankruptcy soon." In fact, according to CMS' own Provider Contractor Satisfaction Survey, physicians' experience with the Medicare enrollment process has ranked at the bottom and essentially amounts to a score of "C-." Enrollment has perennially been an area where CMS contractors have struggled to implement agency changes with limited resources and within artificially short deadlines.


Page 8:


In our significant experience with educating physicians about federal policies, the AMA has found that it usually takes at least six months to adequately reach out and inform physicians about new requirements. Lawmakers' growing propensity for cramming hundreds of program changes into massive legislative vehicles with retroactive effective dates and inadequate lead time has greatly complicated things for both CMS and physicians and we sympathize with the agency's struggle to provide adequate notice and education in the current environment. Nonetheless, the critical mass of regulatory change in any given year has become so great that something has to give. Keeping up with the swelling number of Medicare rules has become a full time job that is an enormous challenge even for large practices and can be almost impossible for smaller practitioners. The problem is compounded when, as has happened with increasing frequency, they are confronted with a host of new rules contained in a voluminous physician fee schedule rule published in November and effective on January 1 of the next year. A large number of physicians thus are completely unaware of the requirements because there has been so little opportunity to educate them before the requirement begins. Moreover, in many instances, details needed to implement the policy are lacking until well into the new year and in some cases new information comes out in a corrective regulation that never becomes widely available.


[83] Report: "Prescription for change 'filled': Tax provisions in the Patient Protection and Affordable Care Act, Updated to reflect changes approved in the Reconciliation Act of 2010." By Clint Stretch and others. Deloitte, March 30, 2010. http://www.deloitte.com/...


Page 19:


Reporting related to individual mandate, employer penalties …


Generally the information to be reported with respect to insured individuals includes identifying information, dates of coverage, and any premium tax credit or cost sharing subsidy received by the individual with respect to such coverage, and any other information required by the Treasury Secretary. For insurance provided through an employer's group health plan, the insurer must report the name, address, and EIN of the employer maintaining the plan, the portion of the premium required to be paid by the employer, and any information the Secretary may require to administer the new tax credit for qualified small employers. Failure to comply with the requirement would trigger existing penalties associated with the filing of information returns.


Reporting by large employers – Any large employer subject to rules for maintaining minimum essential coverage, must file a return that identifies the employer; certifies whether it offers to its full-time employees the option to enroll in a minimum essential coverage plan; and provides the number of full-time employees during each month of the calendar year and information identifying each full-time employee covered under the employer-provided health plan.


Effective date – These new reporting requirements apply for calendar years beginning after 2013.


Disclosure of tax return information


The Act also authorizes the Treasury to disclose to the Secretary of Health and Human Services relevant individual income tax return information used for determining eligibility for premium tax credits; cost-sharing reduction; and participation in a State Medicaid program, a State children's health insurance program, or a basic health program under the Act. The Health and Human Services agency could in turn provide the information to an exchange created by the Act.


Effective date – The change in disclosure rules is effective upon enactment.


Observation


These new reporting requirements will significantly increase the amount of information that must be reported to the IRS as well as the number of information returns that businesses must file. Employers will need to implement the appropriate record keeping and data collection processes to meet the reporting requirements, including, where necessary, processes to effectively communicate the required information to third parties providing payroll administration or managing other reporting obligations.


Information reporting requirements bring with them the necessity of obtaining appropriate taxpayer identification numbers from payees to avoid backup withholding obligations. Businesses will need to implement additional procedures to collect the data necessary to meet these new obligations.


[84] Memo: "State Health Insurance Mandates and the ACA [Affordable Care Act] Essential Benefits Provisions." Compiled by Richard Cauchi. National Conference of State Legislatures. Updated December 16, 2011.


Appendix I:


Mandated benefits (also known as "mandated health insurance benefits" and "mandates") are benefits that are required to cover the treatment of specific health conditions, certain types of healthcare providers, and some categories of dependents, such as children placed for adoption. A number of health care benefits are mandated by either state law, federal law — or in some cases — both. Between the federal government and the states there are upwards of 2000 health insurance mandates.


Although mandates continue to be added as health insurance requirements, they are controversial. Patient advocates claim that mandates help to ensure adequate health insurance protection while others (especially health insurance companies) complain that mandates increase the cost of healthcare and health insurance.


Mandated Health Insurance Benefit Laws

Mandated health insurance laws passed at either the federal or state level usually fall into one of three categories:


• Health care services or treatments that must be covered, such as substance abuse treatment, contraception, in vitro fertilization, maternity services, prescription drugs, and smoking cessation.

• Healthcare providers other than physicians, such as acupuncturists, chiropractors, nurse midwives, occupational therapists, and social workers.

• Dependents and other related individuals, such as adopted children, dependent students, grandchildren, and domestic partners.


The mandated benefit laws most often apply to health insurance coverage offered by employers and private health insurance purchased directly by an individual.


Mandated Insurance Benefits and the Cost of Health Insurance


Most people – whether for or against mandates – agree that mandated health benefits increase health insurance premiums. Depending on the mandated benefit and how that benefit is defined, the increase cost of a monthly premium can increase from less than 1% to more than 5%.


Trying to figure out how a mandated benefit will impact an insurance premium is very complicated. The mandate laws differ from state to state and even for the same mandate, the rules and regulations may vary.


For example: Most states mandate coverage for chiropractors, but the number of allowed visits may vary from state to state. One state may limit the number of chiropractor visits to four each year, while another state may allow up to 12 chiropractor visits each year. Since chiropractor services can be expensive, the impact on health insurance premiums may be greater in the state with the more generous benefit.


Additionally, the lack of mandates could also increase the cost of healthcare and health insurance premiums. If someone who has a medical problem goes without necessary health care because it is not covered by his or her insurance, he or she may become sicker and need more expensive services in the future.


[85] Article: "Obama Reaffirms Insurers Must Cover Contraception." By Robert Pear. New York Times, January 20, 2012. http://www.nytimes.com/...


The Obama administration said Friday that most health insurance plans must cover contraceptives for women free of charge, and it rejected a broad exemption sought by the Roman Catholic Church for insurance provided to employees of Catholic hospitals, colleges and charities.

Federal officials said they would give such church-affiliated organizations one additional year — until Aug. 1, 2013 — to comply with the requirement. Most other employers and insurers must comply by this Aug. 1. …

The 2010 health care law says insurers must cover “preventive health services” and cannot charge for them.

The new rule interprets this mandate. It requires coverage of the full range of contraceptive methods approved by the Food and Drug Administration. Among the drugs and devices that must be covered are emergency contraceptives including pills known as ella and Plan B. The rule also requires coverage of sterilization procedures for women without co-payments or deductibles.


[86] Paper: "The price of innovation: new estimates of drug development costs." By Joseph A. DiMasi and others. Journal of Health Economics, 2003. Pages 151-185. http://www.cptech.org/ip/health/econ/dimasi2003.pdf


Page 151:


The research and development costs of 68 randomly selected new drugs were obtained from a survey of 10 pharmaceutical firms. These data were used to estimate the average pre-tax cost of new drug development. The costs of compounds abandoned during testing were linked to the costs of compounds that obtained marketing approval. The estimated average out-of-pocket cost per new drug is US$ 403 million (2000 dollars). Capitalizing out-of-pocket costs to the point of marketing approval at a real discount rate of 11% yields a total pre-approval cost estimate of US$ 802 million (2000 dollars).


Page 156: "In the United States, manufacturers submit a new drug application (NDA) or a biological license application (BLA) to the FDA for review and approval."


Pages 164-165:


The time between the start of clinical testing and submission of an NDA or BLA with the FDA was estimated to be 72.1 months, which is 3.5 months longer than the same period estimated in the previous study. However, the time from the start of clinical testing to marketing approval in our timeline for a representative drug averaged 90.3 months for the current study, compared to 98.9 months for the earlier study. The difference is accounted for by the much shorter FDA approval times in the mid to late 1990s that were associated with the implementation of the Prescription Drug Use Fee Act of 1992. While the approval phase averaged 30.3 months for the earlier paper's study period, that phase averaged only 18.2 months for drugs covered by the current study.


[87] Article: "Medical Device Makers Shun United States." By Andrew Pollack. New York Times, February 9, 2011. http://www.nytimes.com/2011/02/10/business/10device.html?_r=1&hp


Late last year, Biosensors International, a medical device company, shut down its operation in Southern California, which had once housed 90 people, including the company's top executives and researchers.


The reason, executives say, was that it would take too long to get its new cardiac stent approved by the Food and Drug Administration.


"It's available all over the world, including Mexico and Canada, but not in the United States," said the chief executive, Jeffrey B. Jump, an American who runs the company from Switzerland. "We decided, let's spend our money in China, Brazil, India, Europe."


[88] Report: " A Physician's Guide to Language Interpreter Services." Minnesota Medical Association, 2004. https://www.mnmed.org/...


Page 3:


The legal requirements for physicians and clinics to provide interpreter services are not newly enacted but instead stem from Title VI of the Civil Rights Act of 1964.


Title VI of the Civil Rights Act of 1964 states, "No person in the United States shall, on grounds of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance." Title VI applies to all recipients of federal funds, without regard to the amount of federal funds that they have received. It covers physicians who treat Medicaid or Medicare patients.


Under federal law, providers are prohibited from singling out patients based on race or national origin, and cannot employ practices that have a discriminatory impact on individuals based upon their race or national origin. Federal regulations that implement Title VI provide that:


A recipient . . . may not . . . utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color or national origin, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program [with] respect [to] individuals of a particular race, color or national origin. [42 C.F.R. 80.3(b)(2)]


The federal law covers all entities that receive federal financial assistance, including funds from the Department of Health and Human Services, either directly or indirectly. These entities include physicians, clinics, and hospitals that operate, provide, or engage in health programs and activities that receive federal financial assistance.


Page 4:


This means that physicians who receive financial reimbursement or payments under the Medicaid and/or Medicare programs are required to comply with Title VI. If a clinic is participating in either or both programs, it is obligated under federal law to ensure that all of its patients, including all LEP patients, are able to receive effective communication in the course of the office visit. The federal law requires clinics to provide access to health care services, including language interpreting services, when needed, for all patients who have limited English proficiency, not only those patients who are actually enrolled in a public financial health program.


Under the law, physicians and other health care providers need to notify LEP patients regarding their right to language assistance services when needed. Physicians and clinics have a responsibility to ensure that their policies and procedures do not deny their patients access to health care services because of a language barrier. The key to providing access to health care services for LEP persons is to ensure that the language assistance provided results in accurate and effective communication between the provider and the LEP patient. The U.S. Department of Health and Human Services' Office for Civil Rights recommends doing the following to ensure compliance with the law:


1. Assessing the language needs of the patient population;

2. Developing a written policy regarding language access that will ensure meaningful communication;

3. Training staff members so they understand the policy and are capable of carrying it out; and

4. Monitoring to ensure LEP patients have meaningful access to health care.


Failure to implement one or more of these procedures does not necessarily mean noncompliance with Title VI. In case of a complaint or an investigation, the Office for Civil Rights will review the circumstances involved and determine compliance on a case-by-case basis. The assessment will take into account a number of factors, including the size of the clinic, the size of the LEP population, the nature of the services provided, the resources available, the frequency of different languages encountered, and the frequency with which LEP persons come into contact with the services.


[89] "Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons." U.S. Department of Health and Human Services, August 4, 2003. http://www.hhs.gov/ocr/civilrights/resources/laws/revisedlep.html


III. Who Is Covered?


Department of Health and Human Services [HHS] regulations, 45 CFR 80.3(b)(2), require all recipients of federal financial assistance from HHS to provide meaningful access to LEP [limited English proficient] persons.(3) Federal financial assistance includes grants, training, use of equipment, donations of surplus property, and other assistance.


(3) Pursuant to Executive Order 13166, the meaningful access requirement of the Title VI regulations and the four-factor analysis set forth in the DOJ LEP Guidance are to apply additionally to the programs and activities of federal agencies, including HHS.


Recipients of HHS assistance may include, for example:


• Hospitals, nursing homes, home health agencies, and managed care organizations.

• Universities and other entities with health or social service research programs.

• State, county, and local health agencies.

• State Medicaid agencies.

• State, county and local welfare agencies.

• Programs for families, youth, and children.

• Head Start programs.

• Public and private contractors, subcontractors and vendors.

• Physicians and other providers who receive Federal financial assistance from HHS.


Recipients of HHS assistance do not include, for example, providers who only receive Medicare Part B payments.(4)


[90] Article: "New York Offers Costly Lessons on Insurance. By Anemona Hartocollis. New York Times, April 17, 2010. http://www.nytimes.com/2010/04/18/nyregion/18insure.html?hp


In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses. …


Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the "adverse selection death spiral." …


At the same time, New York has the highest average annual premiums for individual policies: $6,630 for single people and $13,296 for families in mid-2009, more than double the nationwide average, according to America's Health Insurance Plans, an industry group.


[91] FAQ: "Selling Health Insurance Across State Lines." By Phil Galewitz and Lexie Verdon. Kaiser Health News, January 25, 2011. http://www.kaiserhealthnews.org/...


What currently restricts insurers from selling policies outside of their home states?

Insurers are allowed to sell policies only in states where they are licensed to do business. Most insurers obtain licenses in multiple states. States have different laws regulating benefits, consumer protections and financial and solvency requirements.


[92] Book: Basics of the U.S. Health Care System. By Nancy J. Niles. Jones and Bartlett, 2011.


Pages 118-119:


HOSPITAL LICENSURE, CERTIFICATION, AND ACCREDITATION


State governments oversee the licensure of healthcare facilities including hospitals. States set their own standards. It is important to note that all facilities must be licensed but do not have to be accredited. State licensure focuses on building codes, sanitation, equipment, and personnel. Hospitals must be licensed to operate with a certain number of beds.


Certification of hospitals enables them to obtain Medicare and Medicaid enrollment. This type of certification is mandated by the Department of Health and Human Services (HHS). All hospitals that receive Medicare and Medicaid reimbursement must adhere to conditions of participation that emphasize patient health and safety. Accreditation is a private standard developed by accepted organizations as a way to meet certain standards. For example, accreditation of a hospital by The Joint Commission (TJC) means that hospitals have met Medicare and Medicaid standards and do not have to be certified.


[93] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 12: "But this is only federal-level regulation. Hospitals also are regulated by local and state agencies, as well as other private accrediting organizations. Figure 3 shows how many agencies are involved in regulating hospitals—almost 30 at the federal level alone. Almost no coordination exists among various federal agencies or between similar agencies at local and state levels, and private-sector accreditation."


[94] Letter: Michael D. Maves (Executive Vice President and CEO of the American Medical Association) to Donald Berwick (Administrator, U.S. Centers for Medicare and Medicaid Services), April 13, 2011. http://www.ama-assn.org/...

 

Pages 5-6:


We ask CMS to consider that physicians are already subject to claims review by multiple contractors including Medicare Parts A and B (FFS) RAC Medicare Administrative Contractors (MAC), Medicaid Integrity Contractors (MIC), Comprehensive Error Rate Testing Contractors (CERT), and Zone Program Integrity Contractors (ZPIC). In addition, physicians will soon be subject to Medicaid RAC audits. These audits, identified as a problem by 19 percent of our survey respondents, present a paramount example of the redundant, inconsistent or overlapping administrative burdens that President Obama's recent executive order asked CMS to identify, streamline, and, if appropriate, repeal. At the very least, the regulations that control these programs should be coordinated to maximize net benefits. CMS recently issued a proposed rule on Medicaid RAC audits. During the RAC Medicare pilots, the AMA worked extensively with CMS to reduce the burden and to ensure that the RAC program was equitable. CMS' proposed rule on Medicaid RAC did not reflect these improvements.


Also, in the event that CMS requires Medicare Parts C and D RAC to conduct claims review similar to the model already employed by the Medicare FFS RAC program, we urge the agency to establish clear criteria and require Medicare Parts C and D plans to compensate physicians for the office staff time required to pull, review, copy, and re-file medical records, as well as photocopying and postage charges. Further, we ask CMS to utilize notices that ensure that physicians can identify the entity that is requesting information, the reason for the request, and the reason for any deadline that is given for responding to the request. Lastly, we urge CMS to implement policies in the Medicaid RAC program which are consistent with the Medicare RAC audits.


[95] Web page: "Physician Licensure: An Update of Trends." American Medical Association. Accessed January 18, 2012 at http://www.ama-assn.org/...


Each of the 50 states, the District of Columbia, and the United States territories and their respective boards of medical licensure have rules that govern the ability of health care practitioners, including allopathic and osteopathic physicians, to practice medicine. These laws were enacted under the police power reserved to the states by the U.S. Constitution to adopt laws to protect the health, safety and general welfare of their citizens. This gives the states the ability to effectively monitor the quality of persons wishing to practice medicine in that area. In addition, most state statutes delegate authority for enforcing licensure laws to the state Boards of Medical Examiners. Osteopathic physicians are licensed for the full practice of medicine and surgery in all 50 states. Each state determines the tests and procedures for licensing its physicians. In some states, the same tests are given to DO's and MD's; other states administer separate licensing exams. …


Until recently, a physician could provide an opinion or interpretation to a physician in another state who had primary patient care responsibility, and this practice was not regarded as practicing out of his/her state. Today, however, the out-of-state practice of medicine without a license is prohibited, whether the physician is treating the patient in person or from a distant location. In this day and age, a physician is considered to be practicing medicine in the state where the patient is located and is subject to that state's laws regarding medical practice, which typically means a license in that particular state is necessary. Thus, state boards have denied requests from out-of-state psychiatrists, for example, to conduct therapy with their patients located in another state via telephone or videoconferencing. Imprecise definitions regarding just what is "out-of-state" medicine (e.g, phone calls from patients who live in one state, but who seek care from an adjacent state, across a state line for care) also abound. Some states consider all out-of-state practice to be telemedicine, whether it utilizes phone calls, e-mail or online discussions. Even definitions from organizations such as the American Medical Informatics Association, the United States Department of Commerce, and various state and specialty medical societies vary considerably. …


A physician who seeks multiple state licenses for whatever reason may find the current system burdensome in terms of the time, expenses and varying licensure requirements. A patchwork of medical record, patient confidentiality, continuing medical education requirements, and mandatory reporting laws, along with differing medical practice acts, complicate the process. Difficulties are further exacerbated for physicians who practice telemedicine.


Licensure "by endorsement" is the process by which a physician licensed in one state seeks a license from a second state. A physician who physically practices in his/her home state but provides consultative or telemedicine services to patients in five other states, even adjacent states, must complete one in-state and five out-of-state applications for licensure, with six sets of accompanying documentation, and pay six registration fees. Each state has an independent application process with separate requirements. Fees for licenses by endorsement, including processing, application, and administrative fees, range from $1,108 in California to $20 in Pennsylvania; the average is $339. Moreover, most states require a physical appearance for some applicants before the local licensing board, which contributes to the time and expense.


Also, many states require the current licensing exam to be taken and passed if it has been more than 7 to 10 years since the applicant passed the then-current exam. There can be considerable expenses in terms of time and cost associated with preparing and taking the exam, particularly for specialists, who have limited the scope of their practice and who may have had no recent exposure to some areas covered in the general exam. For physicians who have only one or two years of postgraduate training, or who are international medical graduates, the application requirements in some states are more prohibitive.


[96] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 2: "Because hospitals, health systems and their caregivers are increasingly frustrated with regulatory red tape, the American Hospital Association (AHA) asked PricewaterhouseCoopers (PwC) to survey hospitals and assess the significance of the paperwork burden. The study illustrates a typical episode of care—an elderly woman who falls and fractures her hip—and the resulting patient care—and paperwork—which ensues (see appendix for details)."


NOTE: The layers of paperwork are detailed on pages 25-29.


[97] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 21:


The summary of the number of patient care and paperwork minutes reported by the hospitals for each setting within "Ida Smith's" episode of care were converted to ratios and averaged for all respondents. The resulting ratios, shown below, present the proportion of paperwork time for each unit (e.g. hour) of patient care time. …


Care Setting

Ratio of Patient Care

to Paperwork Time

Emergency Department Care 1 to 1
Surgery and Acute Inpatient Care 1 to 0.6
Skilled Nursing Care 1 to 0.5
Home Health Care 1 to 0.8


[98] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 4: "Each time a physician orders a test or a procedure, the physician documents the order in the patient's record. But the government requires additional documentation to prove the necessity for the test or procedure. Although the physician made a clinical judgment, the decision-making process— which resulted in the medical order—must be documented using an established diagnosis assignment process mandated by the government."


[99] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 11: "Many forms, such as the 'Activities of Daily Living,' must be completed daily by clinical staff to submit to the government to justify the care provided to skilled nursing facility patients."


[100] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 5: "Because of the complexity and continuous changes in Medicare program requirements, medical records must be reviewed by at least four people to ensure compliance."


Page 12: "Even within the Department of Health and Human Services (HHS)—the major federal regulator of hospitals—there is little coordination among its different divisions. HCFA [predecessor agency to the Centers for Medicare and Medicaid Services], for example, has trouble coordinating its Medicare and Medicaid rules and instructions—more than 130,000 pages. (That's three times the size of the Internal Revenue Service Code and its federal tax regulations.)"


[101] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 4: "A Medicare patient arriving at the emergency department is required to review and sign eight different forms—just for Medicare alone."


[102] Report: "Patients or Paperwork: The Regulatory Burden Facing America's Hospitals." PricewaterhouseCoopers (commissioned by the American Hospital Association), 2001. http://www.aha.org/aha/content/2001/pdf/FinalPaperworkReport.pdf


Page 12: "But this is only federal-level regulation. Hospitals also are regulated by local and state agencies, as well as other private accrediting organizations. Figure 3 shows how many agencies are involved in regulating hospitals—almost 30 at the federal level alone. Almost no coordination exists among various federal agencies or between similar agencies at local and state levels, and private-sector accreditation."


[103] Calculated with: "Supplemental Data for the CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Figure B-1: "Primary Spending and Revenues, by Category, Under CBO's Long-Term Budget Scenarios Through 2085."


NOTE: An Excel file containing the data and calculations is available upon request.


[104] Report: "CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Page 4: "Mandatory programs are programs that do not require annual appropriations by the Congress; the funding available for them is generally not limited. Most mandatory spending is for entitlement programs, in which the federal government is required to make payments to any person or entity that meets the eligibility criteria set in law. Discretionary spending, by contrast, is controlled by annual appropriation acts."


Page ix: "[T]he major mandatory health care programs consist of Medicare, Medicaid, the Children's Health Insurance Program,† and health insurance subsidies that will be provided through the exchanges established by the March 2010 health care legislation [i.e., the Affordable Care Act, a.k.a. Obamacare]."


NOTE: † CHIP could also considered a discretionary program (as opposed to mandatory) because it requires ongoing appropriations, although Congress has thus far appropriated funding for the program in 10-year, 3-year, and 2-year increments. More details about CHIP follow below.


[105] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Summary: "[The Affordable Care Act] will enable and support states' creation by 2014 of "American Health Benefit Exchanges." … Based on income, certain individuals may qualify for a tax credit toward their [health insurance] premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange."


[106] Report: "CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Page 1:


This report presents CBO's estimates of the long-term budget outlook under both sets of assumptions—an extended-baseline scenario, reflecting the assumption that current laws do not change, and an alternative fiscal scenario, which incorporates several changes to current law that are widely expected to occur or that would modify some provisions of law that might be difficult to sustain for a long period, thus maintaining what some analysts might consider "current policy" as opposed to current law.


[107] Calculated with data from: "Unemployment Rate, Civilian Labor Force, LNS14000000." U.S. Department of Labor, Bureau of Labor Statistics. Accessed December 14, 2011. http://data.bls.gov/cgi-bin/surveymost?ln


NOTES:

- Average unemployment from 1970-2010 was 6.3%.

- An Excel file containing the data and calculations is available upon request.


[108] "Supplemental Data for the CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Economic Variables: "Average Annual Unemployment Rate"


NOTE: Average unemployment from 1970-2010 was 6.3%.† The current policy scenario projects a return to this level by 2015, a drop to 5.2% by 2020, and stabilization at 5.0% from 2030 onward.


† Calculated with data from: "Unemployment Rate, Civilian Labor Force, LNS14000000." U.S. Department of Labor, Bureau of Labor Statistics. Accessed December 14, 2011. http://data.bls.gov/cgi-bin/surveymost?ln

- An Excel file containing the data and calculations is available upon request.


[109] Calculated with "Supplemental Data for the CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Figure B-1: "Primary Spending and Revenues, by Category, Under CBO's Long-Term Budget Scenarios Through 2085."


NOTES:

- Average federal revenues from 1970-2010 were 18.0% of GDP. The current policy scenario projects a return to this level by 2017, a rise to 18.4% by 2021, and stabilization at 18.4% thereafter.

- An Excel file containing the data and calculations is available upon request.


[110] Report: "CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Pages 3-7:


Under CBO's alternative fiscal scenario, primary spending would be 1.1 percentage points higher as a share of GDP in 2021 than under the extended-baseline scenario…. That difference would grow in later years. The higher primary spending stems from several assumptions of the alternative scenario: that through 2021 lawmakers will act to prevent Medicare's payment rates for physicians from declining; that lawmakers will not allow various restraints on the growth of Medicare costs and health insurance subsidies to have their full effect after the first decade of the projections; and that, as a percentage of GDP, federal spending for things other than Social Security, major mandatory health programs, and interest payments will be close to the level experienced during much of the past decade (rather than falling below that level over the next decade, as under the extended-baseline scenario).8


On the revenue side, the alternative fiscal scenario incorporates the assumption that almost all expiring tax provisions will be extended through 2021 (the end of CBO's 10-year baseline projection period). Most important, CBO assumes for that scenario that the cuts in individual income taxes enacted since 2001 and most recently extended in 2010, which are now scheduled to expire in 2012 or 2013, will be extended through 2021; that relief from the AMT, which is scheduled to expire at the end of 2011, will continue through 2021; and that the 2012 parameters of the estate tax (adjusted for inflation) will apply through 2021. Thereafter, revenues are assumed to remain at their 2021 level of 18.4 percent of GDP, just above the average of the past 40 years.


[111] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 265-266:


STATEMENT OF ACTUARIAL OPINION …


While the Part B projections in this report are reasonable in their portrayal of future costs under current law, they are not reasonable as an indication of actual future costs. Current law would require a physician fee reduction of an estimated 29.4 percent on January 1, 2012—an implausible expectation.


Further, while the Affordable Care Act makes important changes to the Medicare program and substantially improves its financial outlook, there is a strong likelihood that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree—or even approach such a level—as a result of the labor-intensive nature of these services.


Without major changes in health care delivery systems, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to far higher costs for Medicare in the long range than those projected under current law.


[112] Calculated with: "Supplemental Data for the CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Figure B-1: "Primary Spending and Revenues, by Category, Under CBO's Long-Term Budget Scenarios Through 2085."


NOTE: An Excel file containing the data and calculations is available upon request.


[113] Report: "Medicare Primer." By Patricia A. Davis. Congressional Research Service, July 1, 2010. http://aging.senate.gov/crs/medicare1.pdf


Page 2:


Medicare was enacted in 1965 (P.L. 89-97) in response to the concern that only about half of the nation's seniors had health insurance, and most of those had coverage only for inpatient hospital costs. The new program, which became effective July 1, 1966, included Part A coverage for hospital and post-hospital services and Part B coverage for doctors and other medical services. As is the case for the Social Security program, Part A is financed by payroll taxes levied on current workers and their employers; persons must pay into the system for 40 calendar quarters to become entitled to premium-free benefits. Medicare Part B is voluntary, with a monthly premium required of beneficiaries who choose to enroll.


[114] Report: "Medicare Primer." By Patricia A. Davis. Congressional Research Service, July 1, 2010. http://aging.senate.gov/crs/medicare1.pdf


Page 1: "Medicare is a federal insurance program that pays for covered health care services of qualified beneficiaries. It was established in 1965 under Title XVIII of the Social Security Act as a federal entitlement program to provide health insurance to individuals 65 and older, and has been expanded over the years to include permanently disabled individuals under 65."


[115] Report: "Medicare Primer." By Patricia A. Davis. Congressional Research Service, July 1, 2010. http://aging.senate.gov/crs/medicare1.pdf


Page 1: "Medicare serves approximately one in seven Americans and virtually all of the population aged 65 and over. In 2010, the program will cover an estimated 47 million persons (39 million aged and 8 million disabled)."


[116] Calculated with data from the footnote above and "Intercensal Estimates of the Resident Population by Sex and Age for the United States: April 1, 2000 to July 1, 2010." U.S. Census Bureau. Accessed December 21, 2011 at http://www.census.gov/popest/data/intercensal/national/nat2010.html

"Both Sexes … April 1, 2010 … 308,745,538"


CALCULATION: 47,000,000 Medical enrollees / 308,745,538 population = 15.2%


[117] Booklet: "Medicare Coverage of Skilled Nursing Facility Care." Centers for Medicare and Medicaid Services, September 2007. http://www.medicare.gov/publications/pubs/pdf/10153.pdf


Page 1:


Skilled care is health care given when you need skilled nursing or rehabilitation staff to manage, observe, and evaluate your care. Examples of skilled care include intravenous injections and physical therapy. Medicare will only cover skilled care when you meet certain conditions (see page 13).


A Skilled Nursing Facility could be part of a nursing home or hospital. Medicare certifies these facilities if they have the staff and equipment to give skilled nursing care and/or skilled rehabilitation services, and other related health services.


Medicare doesn't cover custodial care if it is the only kind of care you need. Custodial care is care that helps you with usual daily activities like getting in and out of bed, eating, bathing, dressing, and using the bathroom. It may also include care that most people do themselves, like using eye drops, oxygen, and taking care of colostomy or bladder catheters. Custodial care is often given in a nursing facility. See page 20 for ways to get help paying for custodial care.


[118] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 1:


The Medicare program has two components. Hospital Insurance (HI), or Medicare Part A, helps pay for hospital, home health, skilled nursing facility, and hospice care for the aged and disabled. Supplementary Medical Insurance (SMI) consists of Medicare Part B and Part D. Part B helps pay for physician, outpatient hospital, home health, and other services for the aged and disabled who have voluntarily enrolled. Part D provides subsidized access to drug insurance coverage on a voluntary basis for all beneficiaries and premium and cost-sharing subsidies for low-income enrollees. Medicare also has a Part C, which serves as an alternative to traditional Part A and Part B coverage. Under this option, beneficiaries can choose to enroll in and receive care from private "Medicare Advantage" and certain other health insurance plans that contract with Medicare. The costs for such beneficiaries are generally paid on a prospective, capitated basis from the HI and SMI Part B trust fund accounts.


Pages 18-19:


[Under Medicare Part C] Most beneficiaries have the option to enroll in private health insurance plans that contract with Medicare to provide Part A and Part B medical services. The share of Medicare beneficiaries in such plans has risen rapidly in recent years, reaching 25.0 percent in 2010 from 12.4 percent in 2004. Plan costs for the standard benefit package can be significantly lower or higher than the corresponding cost for beneficiaries in the "traditional" or "fee-for-service" Medicare program, but prior to the Affordable Care Act [ACA, a.k.a. Obamacare], private plans were generally paid a higher average amount, and the additional payments were used to reduce enrollee cost-sharing requirements, provide extra benefits, and/or reduce Part B and Part D premiums. These benefit enhancements were valuable to enrollees but also resulted in higher Medicare costs overall and higher premiums for all Part B beneficiaries, not just those who were enrolled in MA plans. Under the ACA, payments to plans will be based on "benchmarks" in a range of 95 to 115 percent of fee-for-service Medicare costs, with bonus amounts payable for plans meeting high quality-of-care standards. (Prior to the ACA, the benchmark range was generally 100 to 140 percent of fee-for-service costs.) As these changes phase in during 2012-2017, the overall participation rate for private health plans is expected to decline from 25 percent in 2010 to about 15 percent in 2020.


[119] Report: "Medicare Primer." By Patricia A. Davis. Congressional Research Service, July 1, 2010. http://aging.senate.gov/crs/medicare1.pdf


Page 1:


• Part A (Hospital Insurance, or HI) covers inpatient hospital services, skilled nursing care, and home health and hospice care. The HI trust fund is mainly funded by a dedicated payroll tax of 2.9% of earnings, shared equally between employers and workers.


• Part B (Supplementary Medical Insurance, or SMI) covers physician services, outpatient services, and some home health and preventive services. The SMI trust fund is funded through beneficiary premiums (set at 25% of estimated program costs for the aged) and general revenues (the remaining amount, approximately 75%).


• Part C (Medicare Advantage, or MA) is a private plan option for beneficiaries that covers all Part A and B services, except hospice. Individuals choosing to enroll in Part C must also enroll in Part B. Part C is funded through the HI and SMI trust funds.


• Part D covers prescription drug benefits. Funding is included in the SMI trust fund and is financed through beneficiary premiums (about 25.5%) and general revenues (about 74.5%).


Page 3: "In 2003, Congress enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173),3 which included a major benefit expansion and placed increasing emphasis on the private sector to deliver and manage benefits. The MMA included provisions that (1) created a new voluntary outpatient prescription drug benefit to be administered by private entities…."


Page 4:


Most persons aged 65 or older are automatically entitled to premium-free Part A because they or their spouse paid Medicare payroll taxes for at least 40 quarters (10 years) on earnings covered by either the Social Security or the Railroad Retirement systems. Persons under age 65 who receive cash disability benefits from Social Security or the Railroad Retirement systems for at least 24 months are also entitled to Part A. …


Persons over age 65 who are not automatically entitled to Part A may obtain coverage by paying a monthly premium ($461 in 2010) or, for persons with at least 30 quarters of covered employment, a reduced monthly premium ($254 in 2010). In addition, disabled persons who lose their cash benefits solely because of higher earnings, and subsequently lose their extended Medicare coverage, may continue their Medicare enrollment by paying a premium, subject to limitations. Generally, enrollment in Medicare Part B is voluntary. All persons entitled to Part A (and persons over 65 not entitled to premium-free Part A) may enroll in Part B by paying a monthly premium. For established Part B enrollees, the 2010 monthly premium remains at $96.40.9 Beginning in 2007, some higher-income individuals started to pay higher premiums. (See the "Part B" section, below.) …


Page 5:


Finally, each individual enrolled in either Part A or Part B is also entitled to obtain qualified prescription drug coverage through enrollment in a Part D prescription drug plan. Similar to Part B, enrollment in Part D is voluntary and the beneficiary pays a monthly premium. Beginning in 2011, some higher-income enrollees will pay higher premiums, similar to enrollees in Part B. Generally, beneficiaries enrolled in an MA plan providing qualified prescription drug coverage (MA-PD plan) must obtain their prescription drug coverage through that plan.11


[120] Brief: "Spending Patterns for Prescription Drugs Under Medicare Part D." By Tamara Hayford. Congressional Budget Office, December 1st, 2011. http://cboblog.cbo.gov/?p=3033


The centerpiece of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Modernization Act) was the creation of Medicare Part D, a subsidized pharmaceutical benefit that went into effect in 2006. That additional coverage constituted the most substantial expansion of the Medicare program since its inception in 1965. In 2010, the federal government spent $62 billion on Part D, representing 12 percent of total federal spending for Medicare that year.


[121] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 7: "Total Medicare expenditures were $523 billion in 2010 and are projected under current law to increase in future years at a somewhat faster pace than either workers' earnings or the economy overall."


[122] Calculated with data from:


a) Table 3.12: "Government Social Benefits." United States Department of Commerce, Bureau of Economic Analysis. Last Revised August 08, 2011. http://www.bea.gov/...

"2010 … Medicare (billions $) [=] 518.4"


b) Table 3.2: "Federal Government Current Receipts and Expenditures." United States Department of Commerce, Bureau of Economic Analysis. Last Revised November 22, 2011. http://www.bea.gov/...

"2010 … Current receipts (billions $) [=] 2,429.6 … Current expenditures [=] 3,703.3."


CALCULATIONS:

$518.4 Medicare expenditures / $3,703.3 billion current expenditures = 14.0%


$518.4 billion Medicare expenditures / $2,429.6 billion current receipts = 21.3%


[123] Letter: "Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers." By John D. Shatto and M. Kent Clemens. United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, May 13, 2011. http://www.cms.gov/...

 

Page 6: "For inpatient hospital services, Medicare payment rates in 2009 were about 67 percent and Medicaid payment rates were about 66 percent of private health insurance payment rates (including Medicaid disproportionate share hospital, or DSH, payments)."


[124] Fact sheet: "Underpayment by Medicare and Medicaid." American Hospital Association, December, 2010. http://www.aha.org/content/00-10/10medunderpayment.pdf


Page 1:

 

Each year, the American Hospital Association (AHA) collects aggregate information on the payments and costs associated with care delivered to beneficiaries of Medicare and Medicaid by U.S. hospitals. The data used to generate these numbers come from the AHA's Annual Survey of Hospitals, which is the nation's most comprehensive source of hospital financial data. …


Payment rates for Medicare and Medicaid, with the exception of managed care plans, are set by law rather than through a negotiation process as with private insurers. These payment rates are currently set below the costs of providing care resulting in underpayment.


Page 2:


Underpayment is the difference between the costs incurred and the reimbursement received for delivering care to patients. Underpayment occurs when the payment received is less than the costs of providing care, i.e., the amount paid by hospitals for the personnel, technology and other goods and services required to provide hospital care is less than the amount paid to them by Medicare or Medicaid for providing that care. …


In the aggregate, both Medicare and Medicaid payments fall below costs and the shortfall has been growing.


• Combined underpayments rose from $3.8 billion in 2000 to $36 billion in 2009.

• For Medicare, hospitals received payment of only 90 cents for every dollar spent by hospitals caring for Medicare patients in 2009.

• For Medicaid, hospitals received payment of only 89 cents for every dollar spent by hospitals caring for Medicaid patients in 2009.


[125] Paper: "The New Workforce: Age and Ethnic Changes." By Judi L. McClellan and Richard Holden. U.S. Department of Labor, Employment and Training Administration, Biennial National Research Conference, 2003. http://wdr.doleta.gov/conference/pdf/holden.pdf


Abstract: "California's primary working age population (20 – 64 years of age) will shrink as a share of the state population after 2010."


[126] Report: "CBO's 2011 Long-Term Budget Outlook." Congressional Budget Office, June 2011. http://www.cbo.gov/...


Page 7:


The retirement of the large baby-boom generation born between 1946 and 1964 portends a long-lasting shift in the age profile of the U.S. population. That shift will substantially alter the balance between the working-age and retirement-age segments of the population. During the next decade alone, the number of people over the age of 65 is expected to rise by more than a third. Over the longer term, the share of people age 65 or older is projected to grow from about 13 percent now to 20 percent in 2035, whereas the share of people ages 20 to 64 is expected to fall from 60 percent to 55 percent. In later decades, the aging of the population is expected to continue, though at a slower rate, because of further increases in life expectancy.


[127] Calculated with data from Table V.A2: "Social Security Area Population as of July 1 and Dependency Ratios, Calendar Years 1941-2090." United States Social Security Administration, Office of the Chief Actuary, May 31, 2013. http://www.ssa.gov/OACT/TR/2013/lr5a2.html

 

NOTE: An Excel file containing the data and calculations is available upon request.


[128] Table V.A3: "Period Life Expectancy." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified May 13, 2011. http://www.ssa.gov/OACT/TR/2011/lr5a3.html


"The period life expectancy at a given age for a given year represents the average number of years of life remaining if a group of persons at that age were to experience the mortality rates for that year over the course of their remaining lives."


NOTE: Data from 2010 is estimated but is within 0.1 years (for both males and females) of the latest year for which the data is not estimated (2007).


[129] Table V.A3: "Period Life Expectancy." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified May 13, 2011. http://www.ssa.gov/OACT/TR/2011/lr5a3.html


"The period life expectancy at a given age for a given year represents the average number of years of life remaining if a group of persons at that age were to experience the mortality rates for that year over the course of their remaining lives."


NOTE: Data from 2010 is estimated but is within 0.1 years (for both males and females) of the latest year for which the data is not estimated (2007).


[130] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 11: "To illustrate the uncertainty and sensitivity inherent in estimates of future Medicare trust fund operations, projections have been prepared under a "low-cost" and a "high-cost" set of economic and demographic assumptions as well as under an intermediate set."


[131] Calculated with data from the "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Pages 228-229:


From the 75-year budget perspective, the present value of the additional resources that would be needed to meet projected expenditures, at current-law levels for the three programs combined [Medicare Hospital Insurance (HI or Part A), Medicare Supplementary Medical Insurance (SMI or Parts B and D), and Social Security] is $33.8 trillion.94 To put this very large figure in perspective, it would represent 3.8 percent of the present value of projected GDP over the same period ($884 trillion). The components of the $33.8-trillion total are as follows:

 

Unfunded HI and OASDI [Social Security]

obligations (trust fund perspective)95

$9.5 trillion (1.1% of GDP)
HI, SMI, and OASDI asset [trust fund]

redemptions

$3.0 trillion (0.3% of GDP)
SMI Parts B and D general revenue

financing

$21.2 trillion (2.4% of GDP)


These resource needs would be in addition to the payroll taxes, benefit taxes, and premium payments scheduled under current law. As noted, the asset redemptions and SMI general revenue transfers represent formal budget commitments under current law, but no provision exists for covering the HI and OASDI trust fund deficits once assets are exhausted.


94As noted previously, the long-range HI and OASDI financial imbalances could instead be partially addressed by expenditure reductions, thereby reducing the need for additional revenues. Similarly, SMI expenditure reductions would reduce the need for general fund transfers.


95Additional revenues and/or expenditure reductions totaling $9.5 trillion, together with $3.0 trillion in asset redemptions, would cover the projected financial imbalance but would leave the HI and OASDI trust funds exhausted at the end of the 75-year period. The long-range actuarial deficit for HI and OASDI includes a cost factor to allow for a normal level of fund assets. See section III.B3 in this report, and section IV.B4 in the OASDI Trustees Report, for the numerical relationship between the actuarial deficit and the "unfunded obligations" of each program.


Pages 84-85: "As noted previously, over the full 75-year period, the [HI trust] fund has a projected present value unfunded obligation of $3.0 trillion. This unfunded obligation indicates that if $3.0 trillion were added to the trust fund at the beginning of 2011, the program would meet the projected cost of current-law expenditures over the next 75 years."

 

Page 1: "Medicare also has a Part C, which serves as an alternative to traditional Part A and Part B coverage. Under this option, beneficiaries can choose to enroll in and receive care from private “Medicare Advantage” and certain other health insurance plans that contract with Medicare. The costs for such beneficiaries are generally paid on a prospective, capitated basis from the HI and SMI Part B trust fund accounts."


CALCULATION: $3.0 trillion in unfunded obligations for the HI Trust Fund (Part A) + $21.2 trillion in general revenue financing needed to fund SMI (Parts B and D) = $24.2 trillion


[132] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 2:


[T]he annual report to Congress on the financial status of Medicare must be based on current law. In this report, the various cost-reduction measures—most importantly the reductions in the payment rate updates for most categories of Medicare providers by the growth in economy-wide multifactor productivity—are assumed to occur in all future years, as required by the Affordable Care Act. In addition, an almost 30 percent reduction in Medicare payment rates for physician services is assumed to be implemented in 2012 as required under current law, despite the virtual certainty that Congress will override this reduction.


Page 98: "The annual report to Congress on the financial status of Medicare is necessarily based on current law, including the substantial reduction in physician payments that would be required and the permanently slower price updates for most other health services, absent any legislative change."


[133] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 229:


As discussed elsewhere in this report, there is a significant likelihood that the projected HI and SMI expenditures are substantially understated as a result of potentially impracticable elements of current law. Although this issue does not affect the nature of the budget and trust fund perspectives described in this appendix, it is important to note that actual long-range present values for HI expenditures and SMI expenditures and revenues are likely to exceed the amounts shown in table V.D2 by a substantial margin.


Page 265-266:


STATEMENT OF ACTUARIAL OPINION …


While the Part B projections in this report are reasonable in their portrayal of future costs under current law, they are not reasonable as an indication of actual future costs. Current law would require a physician fee reduction of an estimated 29.4 percent on January 1, 2012—an implausible expectation.


Further, while the Affordable Care Act makes important changes to the Medicare program and substantially improves its financial outlook, there is a strong likelihood that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree—or even approach such a level—as a result of the labor-intensive nature of these services.


Without major changes in health care delivery systems, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to far higher costs for Medicare in the long range than those projected under current law.


[134] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 1: "Medicaid is a cooperative program between the Federal and State governments to pay for health care and medical services for certain low-income persons in the United States and its Territories."


Page 2: "Authorized by Title XIX of the Social Security Act, Medicaid was signed into law in 1965 and is an optional program for the States. Currently all States, the District of Columbia, and all of the Territories have Medicaid programs."


[135] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Page 1: "Medicaid was enacted in 1965 in the same legislation that created the Medicare program (i.e., the Social Security Amendments of 1965; P.L. 89-97). It grew out of and replaced two earlier programs of federal grants to states that provided medical care to welfare recipients and the elderly."


[136] Calculated with data from "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Page 13: "In FY2010, a total of 68.2 million people were estimated to be enrolled in Medicaid at some time during the year (excluding the territories). Nearly one-half of these beneficiaries (33.9 million) were children, and 18.2 million were adults in families with dependent children. There were also 10.3 million individuals with disabilities and 5.8 million people over the age of 65 enrolled in Medicaid that year."


Page 13: "Different groups under Medicaid have very different service utilization patterns. These patterns result in large differences in the proportion of total benefit expenditures by group."


CALCULATIONS: 33.9 / 68.2 = 50% ; 18.2 / 68.2 = 27% ; 10.3 / 68.2 = 15% ; 5.8 / 68.2 = 9%


[137] Calculated with data from the footnote above and "Intercensal Estimates of the Resident Population by Sex and Age for the United States: April 1, 2000 to July 1, 2010." U.S. Census Bureau. Accessed December 21, 2011 at http://www.census.gov/popest/data/intercensal/national/nat2010.html

"Both Sexes … April 1, 2010 … 308,745,538"


CALCULATION: 68,200,000 Medicaid enrollees / 308,745,538 population = 22.1%


[138] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 14: "Figure 1—Medicaid Enrollment and Expenditures, by Enrollment Group, FY 20091 … Actual Expenditures as a Share of Total … Aged [=] 22% … Blind/Disabled [=] 44% … Adults [=] 14% … Children 20% … 1 Totals and components exclude DSH [Disproportionate Share Hospital] expenditures, territorial enrollees and expenditures, and adjustments."


[139] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 1: "Medicaid is a cooperative program between the Federal and State governments to pay for health care and medical services for certain low-income persons in the United States and its Territories."


Page 2:


Authorized by Title XIX of the Social Security Act, Medicaid was signed into law in 1965 and is an optional program for the States. Currently all States, the District of Columbia, and all of the Territories have Medicaid programs.1


The Federal government establishes certain requirements for each State's Medicaid program. The States then administer their own programs, determining the eligibility of applicants, deciding which health services to cover, setting provider reimbursement rates, paying for a portion of the total program, and processing claims.


Eligibility for enrollment in Medicaid is determined by both Federal and State law. Title XIX specifies which groups of people must be eligible, and States have considerable flexibility to extend coverage to additional groups. In addition to income, eligibility is typically based on several other factors, including financial resources (or assets), age, disability status, other government assistance, and other health or medical conditions such as pregnancy. Beginning in 2014, the Affordable Care Act expands Medicaid eligibility to all individuals under age 65 in families with income below 138 percent of the Federal Poverty Level (FPL).2


2 … The Affordable Care Act technically specifies an upper income threshold of 133 percent of the FPL but also allows a 5-percent income disregard, making the effective threshold 138 percent.


[140] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Summary: "Each state designs and administers its own version of Medicaid under broad federal rules. State variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered."


Page 1: "Even though Medicaid is an entitlement program in federal budget terms, states choose whether to participate, and all 50 states do so."


Pages 1-2:


The federal Medicaid statute … defines more than 50 distinct population groups as being potentially eligible. Historically, Medicaid eligibility was subject to categorical restrictions that generally limited coverage to the elderly, persons with disabilities … members of families with dependent children, certain other pregnant women and children, certain women with breast or cervical cancer, and uninsured individuals with tuberculosis. Recent changes in law (described below) provide eligibility for nonelderly, childless adults who do not fit into these traditional categories.


In addition, to qualify for Medicaid coverage, applicants' income (e.g., wages, Social Security benefits) and sometimes their resources, or assets (e.g., value of a car, savings accounts), must meet program financial requirements. … In recent years, Medicaid has shifted largely to eligibility based on income, and most enrollees do not receive cash assistance. …


Some eligibility groups are mandatory, meaning that all states with a Medicaid program must cover them; others are optional. Examples of groups that states must provide Medicaid to include: …


• pregnant women and children through age 18 with family income below 133% of the federal poverty level (FPL),6


6 For example, in 2010, the FPL for a family of four is $22,050—133% of FPL for such a family would equal $29,326.50.


[141] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Pages 1-2:


The federal Medicaid statute … defines more than 50 distinct population groups as being potentially eligible. Historically, Medicaid eligibility was subject to categorical restrictions that generally limited coverage to the elderly, persons with disabilities … members of families with dependent children, certain other pregnant women and children, certain women with breast or cervical cancer, and uninsured individuals with tuberculosis. Recent changes in law (described below) provide eligibility for nonelderly, childless adults who do not fit into these traditional categories.


In addition, to qualify for Medicaid coverage, applicants' income (e.g., wages, Social Security benefits) and sometimes their resources, or assets (e.g., value of a car, savings accounts), must meet program financial requirements. Medicaid began with eligibility based on receipt of cash assistance under other programs such as Aid to Families with Dependent Children (AFDC), or the SSI program, as noted above. In recent years, Medicaid has shifted largely to eligibility based on income, and most enrollees do not receive cash assistance. However, states are still required to apply rules used by their former AFDC programs4 or the federal SSI program when determining countable income for Medicaid. Generally, SSI rules are applicable to the elderly and those with disabilities, while AFDC rules are applicable to other groups. These programs differ on what counts as income and how much is disregarded (ignored) for determining financial eligibility for Medicaid. States have the option to apply additional disregards in order to reduce countable income.


Some eligibility groups are mandatory, meaning that all states with a Medicaid program must cover them; others are optional. Examples of groups that states must provide Medicaid to include:


• poor families that meet the financial requirements (based on family size) of the former AFDC [Aid to Families with Dependent Children] cash assistance program,5 [5 AFDC income standards are well below the federal poverty level, but states can modify (liberalize or potentially further restrict) these criteria. Although TANF [Temporary Assistance for Needy Families] recipients are not automatically eligible for Medicaid, some states have aligned income rules for TANF and Medicaid, thus facilitating Medicaid coverage for some TANF recipients.]


• families losing Medicaid eligibility due to increased earnings from work who receive up to 12 months of Medicaid coverage,


• pregnant women and children through age 18 with family income below 133% of the federal poverty level (FPL),6 [6 For example, in 2010, the FPL for a family of four is $22,050—133% of FPL for such a family would equal $29,326.50. See http://aspe.hhs.gov/poverty/09extension.shtml.]


• poor individuals with disabilities or poor individuals over age 64 who qualify for cash assistance under the SSI [Supplemental Security Income] program,7 [7 Some states use income, resource and disability standards that differ from current SSI standards.]


• certain groups of legal permanent resident immigrants (e.g., refugees for the first seven years after entry into the U.S.; asylees for the first seven years after asylum is granted; lawful permanent aliens with 40 quarters of creditable coverage under Social Security; immigrants who are honorably discharged U.S. military veterans) who meet all other financial and categorical Medicaid eligibility requirements….


[142] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 133% = $29,725


[143] Report: "Holding Steady, Looking Ahead: Annual Findings of a 50-State Survey of Eligibility Rules, Enrollment and Renewal Procedures, and Cost Sharing Practices in Medicaid and CHIP, 2010-2011." By Martha Heberlein and others. Kaiser Commission on Medicaid and the Uninsured, January 2011. http://www.kff.org/medicaid/upload/8130.pdf


Page 3:


While states have made significant progress in expanding coverage for children, eligibility for their parents continues to lag far behind. In 2010, only one state (CO) expanded Medicaid coverage for parents. As of January 1, 2011, 33 states do not cover parents up to 100 percent of the federal poverty level ($18,310 for a family of three in 2010). The median eligibility threshold for parents remains at 64 percent of the federal poverty level and 16 states limit eligibility to below 50 percent of the federal poverty level ($9,155 for a family of three in 2010). …


Low-income adults without dependent children remain ineligible for Medicaid in the vast majority of states. Under the ACA [Affordable Care Act, a.k.a, Obamacare], Medicaid eligibility will be expanded to a minimum of 133 percent of the federal poverty level, ending the historic exclusion of non-disabled, non-pregnant adults without dependent children from the program. While this change is not required to be in effect until January 1, 2014, states have the option of moving early to cover these adults. In 2010, Connecticut and the District of Columbia took advantage of this option and moved low-income adults they had previously served through state-funded programs to Medicaid. Further, California received approval in 2010 for a waiver to continue and expand county coverage initiatives serving low-income adults. However, even with these expansions, as of January 1, 2011, only seven states (AZ, CT, DE, DC, HI, NY, and VT) provide Medicaid or Medicaid-equivalent benefits to adults without dependent children. Additional states offer more limited coverage to these adults, but in most states, low-income adults without children do not have access to public coverage regardless of their income.


[144] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 64% = $14,304


[145] NOTE: The Affordable Care Act is actually comprised of two acts,† which were passed separately for political/procedural reasons.‡


† Report: "The Long-Term Budget Outlook." Congressional Budget Office, June 2010 (Revised August 2010). http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf


Page ii: "In this report, 'recently enacted health care legislation' refers to the Patient Protection and Affordable Care Act (Public Law 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152)."


‡ Article: "Healthcare Reform Legislation Signed Into Law." By Jerry Klepner and Briana Nord. Dialysis & Transplantation, June 18, 2010. http://onlinelibrary.wiley.com/doi/10.1002/dat.20455/full


[N]egotiations on a final bill were stalled when, on January 19 [2010], Republican Scott Brown was elected to the Massachusetts Senate seat vacated by the death of Senator Edward Kennedy. Brown's election effectively took away the Senate Democratic leadership's 60th vote in support of healthcare reform legislation. Without the filibuster-proof 60 votes in the Senate, Democrats would not have been able to overcome the procedural hurdles to passing a final House-Senate compromise bill without Republican votes. …


The White House and House and Senate Democratic leadership agreed on a two-step process in which the House would pass the Senate-approved healthcare reform bill and then vote on a package of changes to the bill negotiated by Democrats in both chambers. Under budget reconciliation, the Senate would be able pass the package of changes with a simple majority vote [i.e., 50 votes instead of 60].


[146] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 2: "Beginning in 2014, the Affordable Care Act expands Medicaid eligibility to all individuals under age 65 in families with income below 138 percent of the Federal Poverty Level (FPL).22 … The Affordable Care Act technically specifies an upper income threshold of 133 percent of the FPL but also allows a 5-percent income disregard, making the effective threshold 138 percent."


[147] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


Page 162 (in pdf):


TITLE II—ROLE OF PUBLIC PROGRAMS

Subtitle A—Improved Access to Medicaid …

SEC. 2002. INCOME ELIGIBILITY FOR NONELDERLY DETERMINED USING MODIFIED GROSS INCOME. …

(C) NO ASSETS TEST.—A State shall not apply any assets or resources test for purposes of determining eligibility for medical assistance under the State plan or under a waiver of the plan.


[148] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 138% = $30,843


[149] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 28:


The effective participation rate of persons who would have been uninsured for a full year, but are newly eligible for Medicaid as a result of the Affordable Care Act, is assumed to be 97 percent. This assumed participation rate is significantly higher than actual Medicaid participation rates to date and is based on the anticipated impacts of sections of the Affordable Care Act intended to make the process of enrolling easier. In particular, the legislation establishes State or federally operated health insurance exchanges that, among other responsibilities, will facilitate the determination of individuals' and families' eligibility for Federal financial assistance for health insurance, either through Medicaid or through the Federal premium and cost-sharing subsidies for private health insurance plans. The exchanges are assumed to perform this role effectively and, for those found to qualify for Medicaid, to assist the application and enrollment process. In this role, the exchanges would also serve as a valuable new resource for health providers who seek assistance in enrolling eligible persons in Medicaid. In addition, we anticipate that the more widespread availability of financial assistance under the Affordable Care Act (for individuals and families with incomes up to 400 percent of FPL) will reduce any stigma associated with receipt of such assistance through Medicaid.


Page iv:


The most significant change to Medicaid is the expansion of Medicaid eligibility beginning in 2014. This expansion, together with greater participation by individuals eligible under current rules, is projected to add 11.6 million people to enrollment in FY [fiscal year] 2014 and almost 20 million people by FY 2019, 21 percent and 34 percent, respectively, compared to pre-Affordable Care Act estimates. These increases reflect both the greater proportion of the population that will be eligible for Medicaid and an assumption that the new State health insurance exchanges will be very effective in assisting enrollment in Medicaid. Of the new enrollees … about 78 percent are projected to be eligible only under the new rules beginning in 2014.


[150] Report: "Holding Steady, Looking Ahead: Annual Findings of a 50-State Survey of Eligibility Rules, Enrollment and Renewal Procedures, and Cost Sharing Practices in Medicaid and CHIP, 2010-2011." By Martha Heberlein and others. Kaiser Commission on Medicaid and the Uninsured, January 2011. http://www.kff.org/medicaid/upload/8130.pdf


Page 3: "As part of creating a seamless enrollment system, the ACA [Affordable Care Act] makes significant changes in Medicaid rules for many beneficiaries, including eliminating the asset test and evaluating eligibility using an IRS-based definition of income (i.e., "Modified Adjusted Gross Income" or "MAGI"), which will also be used to determine eligibility for Exchange subsidies."


[151] Calculated with data from:


a) Table V.A2: "Social Security Area Population as of July 1 and Dependency Ratios, Calendar Years 1950-2086." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified May 13, 2011. http://www.ssa.gov/OACT/TR/2011/lr5a2.html


b) "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf

Page 12: "Enrollment is measured in two ways: (1) ―person-year equivalents (PYE), or the average enrollment over the course of a year, and (2) ―ever-enrolled persons, or the number of people covered by Medicaid for any period of time during the year. In FY 2009, Medicaid enrollment was estimated to be 50.1 million PYE (including enrollment in the U.S. territories). An estimated 62.9 million people, or about one person in five in the U.S., were ever-enrolled."

Page 19: "Table 3—Historical and Projected Medicaid Enrollment and Expenditures for Medical Assistance Payments and Administration, Selected Years (Enrollment in millions of person-year equivalents, expenditures in billions of dollars)"


NOTE: An Excel file containing the data and calculations is available upon request.


[152] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Page 13: "[T]raditional Medicaid … compared to both Medicare and employer-sponsored health care plans, offers the broadest array of medical care and related services available in the United States today."


[153] Report: "American Recovery and Reinvestment Act: Development of a Medicaid/CHIP Environmental Scanning and Program Characteristics (ESPC) Database." Submitted by IMPAQ International and RTI International. Department of Health and Human Services, Centers for Medicare and Medicaid Services, March 31, 2011.


Page 27:


Appendix E: Medicaid-covered services in the Environmental Scanning and Program Characteristics database


Medicaid-Covered Services


• Ambulance

• Certified registered nurse anesthetist

• Chiropractor

• Dental

• Dentures

• Diagnostic, screening, and preventive

• Early and periodic screening, diagnosis and treatment

• Extended services for pregnant women

• Eyeglasses

• Family planning

• Federally qualified health center

• Freestanding ambulatory surgery center

• Hearing aids

• Home- and community-based services waiver

• Home health services

• Hospice care

• ICF [intermediate care facility] services for the mentally retarded

• Inpatient hospital services, other than in an IMD [institution for mental diseases]

• Inpatient hospital, nursing facility and ICF/IMD

• Inpatient psychiatric services, under age 21

• Laboratory and x-ray, outside hospital or clinic

• Medical and remedial care—other practitioners

• Medical equipment and supplies

• Medical/surgical services of a dentist

• Mental health and substance abuse rehabilitation

• Nonemergency medical transportation

• Nurse midwife

• Nurse practitioner

• Nursing facility services, other than in an IMD

• Occupational therapy

• Optometrist

• Outpatient hospital

• Personal care

• Physical therapy

• Physician

• Podiatrist

• Prescription drugs

• Private duty nursing

• Program of All-inclusive Care for the Elderly

• Prosthetic and orthotic devices

• Psychologist

• Public health and mental health clinics

• Religious nonmedical HCI [health care institution] and practitioner

• Rural health clinic

• Speech, hearing and language disorders

• Targeted case management


[154] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Summary: "Each state designs and administers its own version of Medicaid under broad federal rules. State variability is the rule rather than the exception in terms of eligibility levels, covered services, and how those services are reimbursed and delivered. The new health reform law makes both mandatory and optional changes along these dimensions for the Medicaid program."


[155] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 3: "Beneficiary cost sharing, such as deductibles or co-payments, and beneficiary premiums are very limited in Medicaid and do not represent a significant share of the total cost of health care services for Medicaid enrollees."


Page 14: "In particular, Medicaid pays almost all health care costs for enrolled children and non-disabled non-aged adults. However, many aged or disabled beneficiaries are also enrolled in Medicare, which is the primary payer of benefits before Medicaid; thus,15: these per enrollee Medicaid estimates are less than the total cost of such beneficiaries' annual health care across all payers."


[156] Article: "You Paid For It: Ambulance Rides, Health Care Reform." By Michael Wooten. WGRZ (Local NBC affiliate in Buffalo NY), Jul 30, 2009. http://www.wgrz.com/news/local/story.aspx?storyid=69029&catid=37


Graham doesn't have a job, insurance or car. So, when he feels bad, he doesn't call a cab. He calls 911 to have an ambulance drive him to the hospital.


A 2 On Your Side investigation found that from January 2006 to May of this year, Rural Metro Ambulance picked him up 603 times.


Medicaid picked up the tab for each ride, costing taxpayers at least $118,158.


[157] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 3: "Medicaid costs are met by Federal and State general revenues, on an as-needed basis. The Federal financing is authorized through an annual appropriation by Congress."


[158] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Page 8:


The state-specific federal share for benefit costs is determined by a formula set in law that establishes higher federal shares for states with per capita personal income levels lower than the national average (and vice versa for states with per capita personal income levels that are higher than the national average).17 The federal share, called the federal medical assistance percentage (FMAP), is at least 50% and can be as high as 83% (statutory maximum). For FY2011 (excluding the temporary increase in FMAP currently in effect through December 2010) [via the American Recovery and Reinvestment Act of 2009, a.k.a. the "Obama stimulus"], the federal share for benefit costs ranges from 50% (in 13 states) up to 74.73% (in one state, Mississippi).


[159] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Page 8:


The federal and state governments share the cost of Medicaid. States are reimbursed by the federal government for a portion (the "federal share") of a state's Medicaid program costs. Because Medicaid is an open-ended entitlement, there is no upper limit or cap on the amount of federal funds a state may receive. Medicaid costs in a given state and year are primarily determined by the expansiveness of eligibility rules and beneficiary participation, the breadth of benefits offered, the generosity of provider reimbursement rates, and other supplemental payments.


[160] Paper: "States' Use of Medicaid Maximization Strategies to Tap Federal Revenues: Program Implications and Consequences." By Teresa A. Coughlin and Stephen Zuckerman. Urban Institute, June 1, 2002. http://www.urban.org/UploadedPDF/310525_DP0209.pdf


Page 1: "Medicaid financing rules require states to spend their own funds to receive a federal financial match for Medicaid services, but there are no federal limits on program spending. This open-ended commitment of federal resources invites states to be generous in designing their programs. At the same time, because states share in the costs, it encourages states to use federal Medicaid dollars judiciously."


[161] Commentary: "Medicaid bailout will hurt Georgia." By Brian Blase. Atlanta Journal Constitution, August 26, 2010. http://www.ajc.com/opinion/medicaid-bailout-will-hurt-600550.html


For instance, New York spends more than $18,000 on Medicaid for each person in poverty.


In Georgia, Medicaid spending per person in poverty is less than $6,000, which is a more sustainable and fiscally responsible amount. Only 18 percent of Georgians are enrolled in Medicaid as opposed to 26 percent in New York, with its more generous eligibility rules.


[162] Calculated with data from:


a) Table 3.12: "Government Social Benefits." United States Department of Commerce, Bureau of Economic Analysis. Last Revised August 08, 2011. http://www.bea.gov/...

"2010 … Medicaid (billions $) [=] 405.4"


b) Table 3.2: "Federal Government Current Receipts and Expenditures." United States Department of Commerce, Bureau of Economic Analysis. Last Revised November 22, 2011. http://www.bea.gov/...

"2010 … Current receipts (billions $) [=] 2,429.6 … Current expenditures [=] 3,703.3."


c) Table 3.20: "State Government Current Receipts and Expenditures." United States Department of Commerce, Bureau of Economic Analysis. Last Revised October 06, 2011. http://www.bea.gov/...

"2010 … Current receipts (billions $) [=] $1,393.5 … Current expenditures [=] $1,443.6"


CALCULATIONS:

$518.4 Medicare expenditures / ($3,703.3 federal current expenditures + $1,443.6 state current expenditures = 10.1%


$518.4 Medicare expenditures / ($2,429.6 federal current receipts + $1,393.5 state current receipts = 13.6%


[163] Report: "Medicaid Primer." By Elicia J. Herz. Congressional Research Service, July 15, 2010. http://aging.senate.gov/crs/medicaid1.pdf


Page 6: "Unauthorized aliens (i.e., illegal aliens, foreign nationals who are not lawfully present in the United States) are ineligible for Medicaid. Such individuals who meet the eligibility requirements for Medicaid, but are ineligible due to immigration status, may receive Medicaid coverage for emergency conditions (i.e., emergency Medicaid) only, which includes costs associated with emergency labor and delivery for pregnant women and excludes costs for organ transplants."


[164] Report: "Review of Medicaid Funding for Emergency Services Provided to Nonqualified Aliens." By Daniel R. Levinson. U.S. Department of Health & Human Services, Office of Inspector General, September 2010. http://oig.hhs.gov/oas/reports/region4/40707032.pdf


Page 1:


Pursuant to Title XIX of the Social Security Act (the Act), the Medicaid program provides medical assistance to low-income individuals and low income individuals with disabilities. …


Federal Emergency Medicaid Funding for Aliens


Section 1903(v) of the Act states that Federal Medicaid funding is available to States for medical services provided to aliens who are not lawfully admitted for permanent residence or otherwise permanently residing in the United States under color of law only when those services are necessary to treat an emergency medical condition. Further, 42 CFR § 440.255 states that Federal Medicaid funding is available to States for medical services provided to aliens granted lawful temporary resident status or lawful permanent resident status and who meet all other requirements for Medicaid only when those services are necessary to treat an emergency medical condition.


Section 1903(v) of the Act and 42 CFR § 440.255 define an emergency medical condition as one manifested by acute symptoms of such severity that the absence of immediate medical attention could reasonably be expected to result in (1) placing the patient's health in serious jeopardy, (2) serious impairment to bodily functions, or (3) serious dysfunction of any body part or organ. Further, 42 CFR § 440.255 specifies that there must be "sudden onset" of the condition. In addition, 42 CFR § 440.255 states that Federal Medicaid funding is available to States for services provided to pregnant women if a provision is included in the approved State plan. These services include routine prenatal care, labor and delivery, and routine postpartum care.


[165] Article: "Across Texas, 60,000 babies of noncitizens get U.S. birthright." By Sherry Jacobson. Dallas Morning News, August 8, 2010. http://www.dallasnews.com/...


"Parkland Memorial Hospital delivers more of those babies than any other hospital in the state. Last year at Parkland, 11,071 babies were born to women who were noncitizens, about 74 percent of total deliveries. Most of these women are believed to be in the country illegally."


[166] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 33: "Figure 6—Medicaid Expenditures as Percentage of Total U.S. Health Expenditures, by Service Category, CY [calendar year] 2008 … Total [=] 14.7% … Dental [=] 5.9% … Physician [=] 7.3% … Drugs [=] 8.3% … Hospital [=] 17.1% … Home Health [=] 34.7% … Nursing Home [=] 40.6%"


Page 32:


Among the different types of health care services, Medicaid plays the largest role in the funding of long-term care. According to the 2008 NHE, Medicaid is estimated to have paid for 34.7 percent of all freestanding home health care and 40.6 percent of all freestanding† nursing home care in the U.S.29 Medicaid has a major responsibility for providing long-term care because the program covers some aged and many disabled persons, who tend to be the most frequent and most costly users of such care, and because private health insurance and Medicare often furnish only limited coverage for these benefits, particularly for nursing homes. Many people who pay for nursing home care privately become impoverished due to the expense; as a result, these people eventually become eligible for Medicaid.


† See next footnote for definition of "freestanding" in this context.


[167] Book: The U.S. Nursing Home Industry. By Joseph A. Giacalone. M. E. Sharpe, 2011.


Page 6: "Expenditures for freestanding nursing home care reached $87.8 billion in 1998. The 'freestanding' designation is important because HCFA [Health Care Financing Administration, now the Centers for Medicare and Medicaid Services] data on national health expenditures do not include skilled nursing care provided by hospital-based facilities. Such nursing care expenditures are included in the hospital care component of national expenditures."


[168] Report: "Birth & Infant Mortality Trends, New York City: 1998-2007." New York City Department of Health & Mental Hygiene, March 31, 2009. http://www.nyc.gov/html/doh/downloads/pdf/ms/bimt-full-report.pdf


Page 17: "Table 17.1: Live Births by Medicaid Coverage … 2007 … Medicaid [=] 52.1% … No Medicaid [=] 47.9%"


NOTE: Credit for bringing this fact to attention belongs to Jill Gardiner of the New York Sun. [Article: "New York City Birth Rate Plunges." By Jill Gardiner. New York Sun, December 21, 2006. http://www.nysun.com/new-york/new-york-city-birth-rate-plunges/45536/]


[169] NOTE: Just Facts has verified all of the information quoted below with official government sources but is citing this particular source because it is clearly worded and succinct.


Web page: "Medicaid Rules." ElderLawAnswers. Accessed December 29, 2011 at http://www.elderlawanswers.com/Elder_Info/Elder_Article.asp?id=2751


While Congress and the federal Centers for Medicare and Medicaid Services (CMS) set out the main rules under which Medicaid operates, each state runs its own program. As a result, the rules are somewhat different in every state, although the framework is the same throughout the country. …


The spouse of a nursing home resident--called the "community spouse" -- is limited to one half of the couple's joint assets up to $109,560 (in 2011) in "countable" assets…. This figure changes each year to reflect inflation. In addition, the community spouse may keep the first $21,912 (in 2011), even if that is more than half of the couple's assets. This figure is higher in some states, even up to the full maximum of $109,560 (in 2011). …


All assets are counted against these limits unless the assets fall within the short list of "noncountable" assets. These include the following:


• Personal possessions, such as clothing, furniture, and jewelry

• One motor vehicle is excluded, regardless of value, as long as it is used for transportation of the applicant or a household member. …

• The applicant's principal residence, provided it is in the same state in which the individual is applying for coverage.... [P]rincipal residences may be deemed noncountable only to the extent their equity is less than $500,000, with the states having the option of raising this limit to $750,000. In all states … the house may be kept with no equity limit if the Medicaid applicant's spouse or another dependent relative lives there …


In all circumstances, the income of the community spouse will continue undisturbed; he or she will not have to use his or her income to support the nursing home spouse receiving Medicaid benefits. But what if most of the couple's income is in the name of the institutionalized spouse, and the community spouse's income is not enough to live on? In such cases, the community spouse is entitled to some or all of the monthly income of the institutionalized spouse. How much the community spouse is entitled to depends on what the Medicaid agency determines to be a minimum income level for the community spouse. This figure, known as the minimum monthly maintenance needs allowance or MMMNA, is calculated for each community spouse according to a complicated formula based on his or her housing costs. The MMMNA may range from a low of $1,821.50 to a high of $2,739 a month (in 2011). If the community spouse's own income falls below his or her MMMNA, the shortfall is made up from the nursing home spouse's income.


CALCULATION: $2,739 a month personal income × 12 months per year = $32,868


[170] Letter: "Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers." By John D. Shatto and M. Kent Clemens. United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, May 13, 2011. http://www.cms.gov/...


Page 7: "Figure 2 shows the resulting comparison of future Medicare and Medicaid payment rates for physician services relative to private health insurance payment rates. Medicare payment levels in 2009 were about 80 percent of private health insurance payment rates, and Medicaid payment rates in 2008 were about 58 percent."


[171] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Pages 265-266:


STATEMENT OF ACTUARIAL OPINION …


By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.


[172] Report: "Medicaid Patients Increasingly Concentrated Among Physicians." By Peter J. Cunningham and Jessica H. May. Center for Studying Health System Change, August 2006. http://hschange.org/CONTENT/866/


Medicaid payment rates, which are considerably lower than physician payment rates under Medicare or private insurance, historically have deterred physician participation in Medicaid. About one-fifth of physicians (21 percent) reported accepting no new Medicaid patients in 2004-05, a rate six times higher than for Medicare patients and five times higher than for privately insured patients, according to HSC's nationally representative Community Tracking Study Physician Survey (see Data Source and Table 1). Moreover, about half of physicians reported accepting all new Medicaid patients in 2004-05, compared with more than 70 percent for Medicare and privately insured patients. Low physician participation in Medicaid has been shown to negatively affect enrollee access to medical care.


[173] Report: "The State Children's Health Insurance Program." Congressional Budget Office, May 2007. http://www.cbo.gov/ftpdocs/80xx/doc8092/05-10-SCHIP.pdf


Page 1: "The State Children's Health Insurance Program (SCHIP) was created by the Balanced Budget Act of 1997 (Public Law 105-33), under title XXI of the Social Security Act. The program provides federal funding that states can use to expand health insurance coverage to uninsured children living in families with income that is low but too high to be eligible for Medicaid."


[174] Report: "The State Children's Health Insurance Program." Congressional Budget Office, May 2007. http://www.cbo.gov/ftpdocs/80xx/doc8092/05-10-SCHIP.pdf


Page 1: "Under broad federal guidelines, the program grants states flexibility in how they design their programs, including eligibility, benefits, and cost-sharing provisions. (See Box 1 for a comparison with Medicaid.)"


[175] Report: "Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA." By Julie Stone and others. Congressional Research Service, April 28, 2010. http://hrsa.dshs.wa.gov/...


Page 49:


Like Medicaid, CHIP is a joint federal-state program. For each dollar of state spending, the federal government makes a matching payment drawn from CHIP allotments. A state's share of program spending for Medicaid is the percentage not paid by the federal government through the FMAP [federal medical assistance percentage]. But for CHIP, the federal share is higher. That is, the enhanced FMAP (E-FMAP) for CHIP lowers the state's share of CHIP expenditures by 30% compared to the regular Medicaid FMAP. Although uncommon, certain types of CHIP expenditures are reimbursed at a rate different than the E-FMAP, and certain types of Medicaid expenditures are reimbursed at the EFMAP rate. For FY2010, the E-FMAP for CHIP ranges from 65% to 83%.


[176] Report: "Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA." By Julie Stone and others. Congressional Research Service, April 28, 2010. http://hrsa.dshs.wa.gov/...


Page 49: "Under P.L. 111-148 [the Patient Protection and Affordable Care Act of 2010, a.k.a. Obamacare], states will receive a 23 percentage point increase in the CHIP match rate (EFMAP), subject to a cap of 100%, for FY2016 through FY2019 (although no CHIP appropriations are provided for those years). The 23 percentage point increase will not apply to certain expenditures."


[177] House Resolution 2015 (final text as passed by House and Senate): "Balanced Budget Act of 1997." Signed into law by Bill Clinton on August 5, 1997 (became Public Law No: 105-33). http://www.gpo.gov/...


Page 302 (in pdf): "Subtitle J—State Children's Health Insurance Program … Section 201 (a) PURPOSE.—The purpose of this title is to provide funds to States to enable them to initiate and expand the provision of child health assistance to uninsured, low-income children in an effective and efficient manner that is coordinated with other sources of health benefits coverage for children."


Pages 319-320 (in pdf): "Section 2110 (c) ADDITIONAL DEFINITIONS.—For purposes of this title: (1) CHILD.—The term 'child' means an individual under 19 years of age. … (4) LOW-INCOME.—The term 'low-income child' means a child whose family income is at or below 200 percent of the poverty line for a family of the size involved."


[178] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 200% = $44,700


[179] Report: "The State Children's Health Insurance Program." Congressional Budget Office, May 2007. http://www.cbo.gov/ftpdocs/80xx/doc8092/05-10-SCHIP.pdf


Pages 1-2:


Eligibility Criteria for Adults

A number of states have used waiver authority to expand coverage under SCHIP to adults. Covering parents may help to increase participation among children, because parents who are eligible may be more likely to enroll their children also. In particular, section 1115 of the Social Security Act gives the Secretary of Health and Human Services the authority to waive certain statutory and regulatory requirements of Medicaid and SCHIP. The Secretary has used that authority to allow states to expand eligibility for SCHIP to low-income parents, pregnant women, and adults without children.5 As a condition for those waivers, states are required to cover those populations with funds not used to cover children. Section 1115 waivers also provide states additional flexibility to use SCHIP funds to subsidize the purchase of private health insurance through premium assistance programs. Of the 18 states that have obtained section 1115 waivers, 13 have expanded coverage to parents, related caretakers, and legal guardians, as well as pregnant women. Adults without children are currently covered in four states; however, the Deficit Reduction Act of 2005 (P.L. 109- 171) prohibits the approval of such waivers in the future. …


5 In addition to waivers, the SCHIP statute allows states to purchase family coverage with SCHIP funds if such coverage is deemed cost-effective and does not displace private coverage. (Family coverage is considered to be cost-effective when the cost does not exceed that of coverage for children only.) That statutory test has seldom, if ever, been passed.


[180] Report: "The State Children's Health Insurance Program." Congressional Budget Office, May 2007. http://www.cbo.gov/ftpdocs/80xx/doc8092/05-10-SCHIP.pdf

 

Eligibility Criteria for Children

SCHIP was designed for uninsured children under age 19 living in families with income that is low but above Medicaid's threshold.1 According to the SCHIP statute, states may cover children living in families with income up to 200 percent of the federal poverty level or 50 percentage points above their Medicaid threshold.2 States are also allowed to disregard certain types of income and expenses in determining eligibility for the program. Eligibility criteria vary among the states. As of 2006, 26 states had a threshold of 200 percent of the poverty level, 15 states set the limit above 200 percent of the poverty level, and 9 states set it below 200 percent of the poverty level. North Dakota had the lowest threshold, at 140 percent of the poverty level, while New Jersey had the highest, at 350 percent of the poverty level.3


1 Children of state employees cannot be covered under a separate program under SCHIP if they are eligible for coverage under a state health benefits plan. In addition, SCHIP is generally limited to citizens and to legal immigrants who have resided in the United States for five or more years.


2 States are required to maintain the Medicaid threshold that was in place just before SCHIP was enacted. That requirement, known as "maintenance of effort," prevents states from lowering their Medicaid threshold in order to receive a higher matching rate under SCHIP for children who would have otherwise been covered by Medicaid.


3 New Jersey, for example, has effectively expanded its threshold to 350 percent of the poverty level by disregarding all income between 200 percent and 350 percent of the poverty level.


[181] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 350% = $78,225


[182] Calculated with data from the "2010 CHIPRA Annual Report." U.S. Department of Health & Human Services, 2011. http://www.insurekidsnow.gov/professionals/reports/chipra/2010_annual.pdf


"Appendix 2: Children's Health Coverage: 2011 Upper Income Limits … All figures are based on the 2011 Federal Poverty Level (FPL for a family of four ($22,350)"


NOTES:

- This report neglected to include New York, which Just Facts added in from the report: "Holding Steady, Looking Ahead: Annual Findings Of A 50-State Survey Of Eligibility Rules, Enrollment and Renewal Procedures, And Cost Sharing Practices in Medicaid and CHIP, 2010-2011." By Martha Heberlein and others. Kaiser Commission on Medicaid and the Uninsured, January 2011. http://www.kff.org/medicaid/upload/8130.pdf. Pages 29-30: "Table 1 - Upper Income Eligibility Limit for Children's Coverage and Program Type - January 2011"

- An Excel file containing the data and calculations is available upon request.


[183] "2010 CHIPRA Annual Report." U.S. Department of Health & Human Services, 2011. http://www.insurekidsnow.gov/professionals/reports/chipra/2010_annual.pdf


Page 6: "47 states and the District of Columbia no longer consider a family's assets when determining eligibility for children in Medicaid and CHIP."


[184] Report: "Holding Steady, Looking Ahead: Annual Findings of a 50-State Survey of Eligibility Rules, Enrollment and Renewal Procedures, and Cost Sharing Practices in Medicaid and CHIP, 2010-2011." By Martha Heberlein and others. Kaiser Commission on Medicaid and the Uninsured, January 2011. http://www.kff.org/medicaid/upload/8130.pdf


Pages 46-47:


Streamlined Application Requirements for Children's Health Coverage January 2011 … Asset Test NOT Required (or Asset Test Limit)1 … Missouri8 [=] $250,000 … South Carolina11 [=] $30,000 … Texas12 [=]$10,000 …


1. In states with asset limits, the limit noted is for a family of three. …


8. In Missouri, families with income above 150% of the FPL are subject to a "net worth" test. …

 

11. In South Carolina, families do not need to provide proof of assets.


12. In Texas, the limit is $3,000 if a family contains a disabled or elderly member. The $10,000 limit applies to those with income over 150% of the FPL.


[185] Report: "Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in PPACA." By Julie Stone and others. Congressional Research Service, April 28, 2010. http://hrsa.dshs.wa.gov/...


Page 49: "CHIP provides health care coverage to low-income, uninsured children in families with income above Medicaid income standards. States may also extend CHIP coverage to pregnant women when certain conditions are met. In designing their CHIP programs, states may choose to expand Medicaid, create a stand-alone program, or use a combined approach."

 

[186] Report: "Justification of Estimates for Appropriations Committees, Fiscal Year 2012."

Centers for Medicare and Medicaid Services, U.S. Department of Health & Human Services. http://www.hhs.gov/about/FY2012budget/cmsfy12cj_revised.pdf


Page 154: "In FY 2010, CHIP enrollment increased by 4.6 percent (7,705,723 children)."


[187] Report: "Justification of Estimates for Appropriations Committees, Fiscal Year 2012."

Centers for Medicare and Medicaid Services, U.S. Department of Health & Human Services. http://www.hhs.gov/about/FY2012budget/cmsfy12cj_revised.pdf


Page 154: "The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) (P.L. 111-3) reauthorized CHIP from April 2009 through September 30, 2013 and increased funding by $44 billion through FY 2013 to maintain State programs and to cover more insured children. More recently, the Affordable Care Act extended funding for CHIP through FY 2015, providing an additional $28.8 billion in budget authority over the baseline."


[188] Article: "Obama Signs Children's Health Insurance Bill." By Robert Pear. New York Times, February 5, 2009. http://www.nytimes.com/2009/02/05/us/politics/05health.html?_r=1&hp


In a major change, the bill allows states to cover certain legal immigrants — namely, children under 21 and pregnant women — as well as citizens.


Until now, legal immigrants have generally been barred from Medicaid and the State Children's Health Insurance Program for five years after they enter the United States. States will now be able to cover those immigrants without the five-year delay.


[189] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 9:


For HI [Hospital Insurance, a.k.a Medicare Part A], the primary source of financing is the payroll tax on covered earnings. Employers and employees each pay 1.45 percent of wages, while self-employed workers pay 2.9 percent of their net income. Starting in 2013, high-income workers will pay an additional 0.9 percent tax on their earnings above an unindexed threshold ($200,000 for single taxpayers and $250,000 for married couples). Other HI revenue sources include a portion of the Federal income taxes that people pay on their Social Security benefits, as well as interest paid on the U. S. Treasury securities held in the HI trust fund.


[190] Report: "Reducing the Deficit: Spending and Revenue Options." Congressional Budget Office, March 2011. http://cbo.gov/...


Page 133: "Households generally bear the economic cost, or burden, of the taxes that they pay themselves, such as individual income taxes and employees' share of payroll taxes. But households also bear the burden of the taxes paid by businesses. In the judgment of CBO and most economists, the employers' share of payroll taxes is passed on to employees in the form of lower wages."

 

NOTE: For more detail about the economic incidence of payroll taxes, see Just Facts' research on tax distribution.


[191] Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified October 29, 2010. http://www.ssa.gov/oact/cola/cbb.html


"For Medicare's Hospital Insurance (HI) program, the taxable maximum was the same as that for the OASDI [Social Security] program for 1966-1990. Separate HI taxable maximums of $125,000, $130,200, and $135,000 were applicable in 1991-93, respectively. After 1993, there has been no limitation on HI-taxable earnings."


[192] Web page: "Contribution and Benefit Base." United States Social Security Administration, Office of the Chief Actuary. Last reviewed or modified October 29, 2010. http://www.ssa.gov/oact/cola/cbb.html


"Social Security's Old-Age, Survivors, and Disability Insurance (OASDI) program limits the amount of earnings subject to taxation for a given year. … This limit generally increases each year with increases in the national average wage index."


[193] Web page: "History of SSA-related Legislation: 103rd Congress." United States Social Security Administration. Accessed October 31,2008 at http://www.socialsecurity.gov/legislation/history/103.htm


"PL 103-66 The Omnibus Budget Reconciliation Act of 1993 (enacted 8/10/93). Section 13207 repeals the limitation on the amount of earnings subject to the HI [Medicare Hospital Insurance] tax beginning in 1994."


[194] Calculated with data from:


a) Vote 406: "Omnibus Budget Reconciliation Act of 1993." U.S. House of Representatives, August 5, 1993. http://clerk.house.gov/evs/1993/roll406.xml


b) Vote 247: "Omnibus Budget Reconciliation Act of 1993." U.S. Senate, August 6, 1993. http://www.senate.gov/...

 

Combined vote totals from both House of Congress:


Party

Voted YES Voted NO
Republican 0 0% 221 100%
Democrat 267 85% 47 15%
Independent 1 100% 0 0%


NOTE: Results do not include those not voting or those who voted "Present."


[195] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 61: "Up to 85 percent of an individual's or couple's … [Social Security] benefits may be subject to Federal income taxation if their income exceeds certain thresholds.† The income tax revenue attributable to the first 50 percent of … [Social Security] benefits is allocated to the … [Social Security] trust funds. The revenue associated with the amount between 50 and 85 percent of benefits is allocated to the HI [Hospital Insurance, a.k.a. Medicare Part A] trust fund."


NOTE: † These thresholds are exceeded if the "total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly)." [Publication No. 915: "Social Security and Equivalent Railroad Retirement Benefits for Use in Preparing 2010 Returns." United States Department of the Treasury, Internal Revenue Service, Nov 16, 2010. http://www.irs.gov/pub/irs-pdf/p915.pdf]


[196] Research Note #12: "Taxation of Social Security Benefits." By Larry DeWitt. Social Security Administration Historian's Office, February 2001. http://www.ssa.gov/history/taxationofbenefits.html


In 1993, as part of Omnibus Budget Reconciliation Act, the Social Security taxation provision was modified to add a secondary set of thresholds and a higher taxable percentage for beneficiaries who exceeded the secondary thresholds. Specifically, the 1993 did the following:


Modified for a taxpayer with combined income exceeding a secondary threshold amount ($34,000 for an individual, $44,000 for a married couple filing a joint return, and zero for a married person filing separately), so that the amount of benefits subject to income tax is increased to the sum of (1) the smaller of (a) $4,500 for an individual, $6,000 for a married couple filing a joint return, or zero for a married person filing separately, or (b) 50% of the benefit, plus (2) 85% of the excess of the taxpayer's combined income over the secondary threshold. However, no more than 85% of the benefit amount is subject to income tax. The additional income tax revenues resulting from the increase in the taxable percentage from 50% to 85% are transferred to the HI Trust Fund. Effective for taxable years beginning after 1993.


[197] "2010 Annual Report of the Board of Trustees of The Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds." United States Social Security Administration, August 9, 2010. http://www.ssa.gov/OACT/TR/2010/tr2010.pdf


Page 47: "[T]he benefit taxation threshold amounts are not indexed, so that an increasing share of benefits will be subject to tax."


[198] House Resolution 2015 (final text as passed by House and Senate): "Balanced Budget Act of 1997." Signed into law by Bill Clinton on August 5, 1997 (became Public Law No: 105-33). http://www.gpo.gov/...


Page 308 in pdf:


SEC. 2104. ALLOTMENTS.

(a) APPROPRIATION; TOTAL ALLOTMENT.—For the purpose of providing allotments to States under this section, there is appropriated, out of any money in the Treasury not otherwise appropriated—

(1) for fiscal year 1998, $4,275,000,000;

(2) for fiscal year 1999, $4,275,000,000;

(3) for fiscal year 2000, $4,275,000,000;

(4) for fiscal year 2001, $4,275,000,000;

(5) for fiscal year 2002, $3,150,000,000;

(6) for fiscal year 2003, $3,150,000,000;

(7) for fiscal year 2004, $3,150,000,000;

(8) for fiscal year 2005, $4,050,000,000;

(9) for fiscal year 2006, $4,050,000,000; and

(10) for fiscal year 2007, $5,000,000,000.


[199] Report: "Justification of Estimates for Appropriations Committees, Fiscal Year 2012."

Centers for Medicare and Medicaid Services, U.S. Department of Health & Human Services. http://www.hhs.gov/about/FY2012budget/cmsfy12cj_revised.pdf


Page 157: "From FY 1998 through FY 2007, the Balanced Budget Act of 1997 (BBA) (P.L. 105-33) authorized and appropriated $40 billion for CHIP allotments to States, Territories, Commonwealths, and the District of Columbia. The Balanced Budget Refinement Act of 1999 (BBRA) (P.L. 106-113) authorized and appropriated additional funding for CHIP allotments to Commonwealths and Territories."


[200] Calculated with data from:


a) Vote 345: "Balanced Budget Act of 1997." U.S. House of Representatives, July 30, 1997. http://clerk.house.gov/evs/1997/roll345.xml


b) Vote 209: "Balanced Budget Act of 1997." U.S. Senate, July 31, 1997. http://www.senate.gov/...

 

Combined vote totals from both House of Congress:


Party Voted YES Voted NO
Republican 235 84% 44 16%
Democrat 196 78% 55 22%
Independent 0 0% 1 100%


NOTE: Results do not include those not voting or those who voted "Present."


[201] Web page: "Bill Summary & Status, Major Congressional Actions, H.R.1: Medicare Prescription Drug, Improvement, and Modernization Act of 2003." Library of Congress. Accessed January 5, 2012 at http://thomas.loc.gov/cgi-bin/bdquery/z?d108:HR00001:@@@R


"12/8/2003 Signed by President … 12/8/2003 Became Public Law No: 108-173."


[202] Brief: "Spending Patterns for Prescription Drugs Under Medicare Part D." By Tamara Hayford. Congressional Budget Office, December 1st, 2011. http://cboblog.cbo.gov/?p=3033


"The centerpiece of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Medicare Modernization Act) was the creation of Medicare Part D, a subsidized pharmaceutical benefit that went into effect in 2006. That additional coverage constituted the most substantial expansion of the Medicare program since its inception in 1965. In 2010, the federal government spent $62 billion on Part D, representing 12 percent of total federal spending for Medicare that year."


[203] Calculated with data from:


a) Vote 669: "Medicare Prescription Drug, Improvement, and Modernization Act." U.S. House of Representatives, November 22, 2003. http://clerk.house.gov/evs/2003/roll669.xml


b) Vote 459: "Medicare Prescription Drug, Improvement, and Modernization Act." U.S. Senate, November 25, 2003. http://www.senate.gov/...

 

Combined vote totals from both House of Congress:


Party Voted YES Voted NO
Republican 246 88% 34 12%
Democrat 27 11% 224 89%
Independent 1 50% 1 50%


NOTE: Results do not include those not voting or those who voted "Present."


[204] Cost Estimate: "H.R. 1, Medicare Prescription Drug, Improvement, and Modernization Act of 2003." Congressional Budget Office, November 20, 2003. http://www.cbo.gov/ftpdocs/48xx/doc4808/11-20-MedicareLetter.pdf


"CBO estimates that enacting this legislation would result in direct spending outlays totaling $395 billion over the 2004-2013 period. It would also lead to an increase in federal revenues totaling $0.5 billion over that 10-year period."


[205] Press release: "Michael Steele: Republicans' Glass House is Shattering." Democratic Congressional Campaign Committee, March 10, 2010. http://dccc.org/...


"The Republican culture of corruption under Tom DeLay and Republican leadership had devastating consequences that the American people are still paying the price for: a complex and costly prescription drug bill written by drug companies, an energy policy written by the Big Oil companies, and record deficits to pay for tax breaks for their most wealthy friends."


[206] Vote 330: "Rangel of New York Substitute Amendment to H.R. 1, Medicare Prescription Drug, Improvement, and Modernization Act of 2003." U.S. House of Representatives, June 27, 2003. http://clerk.house.gov/evs/2003/roll330.xml


Party Voted YES Voted NO
Republican 0 0% 226 100%
Democrat 174 86% 29 14%
Independent 1 50% 1 50%


NOTE: Results do not include those not voting or those who voted "Present."


[207] Cost Estimate: "Democratic Amendment to H.R. 1, Medicare Prescription Drug, Improvement, and Modernization Act of 2003." Congressional Budget Office, June 26, 2003. http://www.cbo.gov/ftpdocs/43xx/doc4381/hr1ltr.pdf


"The net effect of the bill, we estimate, would be an increase in the deficit of $0.4 billion in 2003, $5.1 billion in 2003, $255.0 billion over the 2004-2008 period, and $968.7 billion over the 2004-2013 period. These estimates are preliminary and subject to revision after we have had an opportunity to carefully review the legislative language. CBO has not yet completed its estimate of the discretionary costs of the bill."


CALCULATION: $969 billion / $395 billion = 2.45


[208] Report: "Justification of Estimates for Appropriations Committees, Fiscal Year 2012."

Centers for Medicare and Medicaid Services, U.S. Department of Health & Human Services. http://www.hhs.gov/about/FY2012budget/cmsfy12cj_revised.pdf


Page 154: "The Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) (P.L. 111-3) reauthorized CHIP from April 2009 through September 30, 2013 and increased funding by $44 billion through FY 2013 to maintain State programs and to cover more insured children."


[209] Bill: "Children's Health Insurance Program Reauthorization Act of 2009." Signed into law by Barack Obama on February 4, 2009 (became Public Law No: 111-003). http://www.gpo.gov/fdsys/pkg/BILLS-111hr2enr/pdf/BILLS-111hr2enr.pdf


Page 4 (in pdf):


TITLE I—FINANCING, Subtitle A—Funding, SEC. 101. EXTENSION OF CHIP…

… for fiscal year 2009, $10,562,000,000;

… for fiscal year 2010, $12,520,000,000;

… for fiscal year 2011, $13,459,000,000;

… for fiscal year 2012, $14,982,000,000; and

… for fiscal year 2013, for purposes of making 2 semiannual allotments—

(A) $2,850,000,000 for the period beginning on October 1, 2012, and ending on March 31, 2013, and

(B) $2,850,000,000 for the period beginning on April 1, 2013, and ending on September 30, 2013.


NOTE: The anomalous appropriations for fiscal year 2013 were set to game the budget scoring process of the CBO. See next footnote for details.


[210] Letter to Paul Ryan (Ranking Member, Committee on the Budget, U.S. House of Representatives) from Robert A. Sunshine (Acting Director, Congressional Budget Office), January 14, 2009. http://www.cbo.gov/ftpdocs/99xx/doc9964/hr2RyanLtr.pdf


The introduced version of H.R. 2 would authorize CHIP through 2013 and would provide significant funding increases over the next few years, leading up to a total funding level of $17.4 billion in 2013. The program's funding for the second half of fiscal year 2013 would be $3 billion. Under baseline rules, that amount annualized—$6 billion—would be projected for each subsequent year. The estimated cost of the bill assumes that funding level for CHIP for fiscal years 2014 through 2019. On that basis, CBO estimates that the introduced version of H.R. 2 would increase federal direct spending by $73.3 billion through 2019, including the costs of other provisions in the bill. (That spending would be offset by increases in federal tax revenues totaling $73.6 billion over the same period, primarily from increases in the excise taxes levied on tobacco products.)


As an alternative to the introduced version of H.R. 2, you requested that CBO assume the CHIP rules and structure as currently delineated in H.R. 2 would remain unchanged through 2019 and that sufficient funding would be made available after 2013 to accommodate projected enrollment growth. The projected enrollment growth is based on expected growth in the total population, as well as changes in the health insurance market and the economy as a whole. Under those assumptions, CBO estimates that average monthly enrollment in CHIP would rise from about 9 million in 2013 to about 12 million in 2019.


Based on the assumptions you specified, CBO estimates total changes in direct spending of $115.2 billion, as compared with the $73.3 billion increase we estimate for the introduced version of H.R. 2. (Revenue increases would remain unchanged.) Thus, the net budget impact of a modified version of H.R. 2, as you specified, would be an increase in deficits totaling $41.6 billion over the 2009-2019 period.


[211] Article: "Obama Signs Children's Health Insurance Bill." By Robert Pear. New York Times, February 5, 2009. http://www.nytimes.com/2009/02/05/us/politics/05health.html?_r=1&hp


In a major change, the bill allows states to cover certain legal immigrants — namely, children under 21 and pregnant women — as well as citizens.


Until now, legal immigrants have generally been barred from Medicaid and the State Children's Health Insurance Program for five years after they enter the United States. States will now be able to cover those immigrants without the five-year delay.


[212] "2009 CHIPRA Annual Report." U.S. Department of Health & Human Services, February 4, 2010. http://www.insurekidsnow.gov/professionals/reports/chipra/2009_annual.pdf


Page 10:


Performance Bonus Payments. CHIPRA established new incentive payments for states that adopt specific policies and procedures in Medicaid and CHIP and that were successful in enrolling already eligible children in Medicaid. CMS issued guidance on the bonus payment criteria on December 17, 2009.21 States need to meet two sets of criteria in order to qualify for a performance bonus payment. They need to have in place at least five eligibility and enrollment improvements known to promote coverage and retention, and demonstrate significant increases in Medicaid enrollment among children.22


22 The eight qualifying program features are 12-months continuous eligibility, liberalization of assets tests, eliminating the in-person interview requirement, using the same application and renewal forms for both Medicaid and CHIP, administrative or automatic renewals, presumptive eligibility, Express Lane Eligibility, and the new premium assistance option specified in CHIPRA.


[213] Bill: "Children's Health Insurance Program Reauthorization Act of 2009." Signed into law by Barack Obama on February 4, 2009 (became Public Law No: 111-003). http://www.gpo.gov/fdsys/pkg/BILLS-111hr2enr/pdf/BILLS-111hr2enr.pdf


Pages 10-15 (in pdf):


SEC. 104. CHIP PERFORMANCE BONUS PAYMENT TO OFFSET ADDITIONAL ENROLLMENT COSTS RESULTING FROM ENROLLMENT AND RETENTION EFFORTS.

Section 2105(a) (42 U.S.C. 1397ee(a)) is amended by adding at the end the following new paragraphs:

(3) PERFORMANCE BONUS PAYMENT TO OFFSET ADDITIONAL MEDICAID AND CHIP CHILD ENROLLMENT COSTS RESULTING FROM ENROLLMENT AND RETENTION EFFORTS.—

(A) IN GENERAL.—In addition to the payments made under paragraph (1), for each fiscal year (beginning with fiscal year 2009 and ending with fiscal year 2013), the Secretary shall pay from amounts made available under subparagraph (E), to each State that meets the condition under paragraph (4) for the fiscal year, an amount equal to the amount described in subparagraph (B) for the State and fiscal year. …

(4) ENROLLMENT AND RETENTION PROVISIONS FOR CHILDREN.— For purposes of paragraph (3)(A), a State meets the condition of this paragraph for a fiscal year if it is implementing at least 5 of the following enrollment and retention provisions (treating each subparagraph as a separate enrollment and retention provision) throughout the entire fiscal year: …

(B) LIBERALIZATION OF ASSET REQUIREMENTS.—The State meets the requirement specified in either of the following clauses:

(i) ELIMINATION OF ASSET TEST.—The State does not apply any asset or resource test for eligibility for children under title XIX or this title.

(ii) ADMINISTRATIVE VERIFICATION OF ASSETS.— The State—

(I) permits a parent or caretaker relative who is applying on behalf of a child for medical assistance under title XIX or child health assistance under this title to declare and certify by signature under penalty of perjury information relating to family assets for purposes of determining and redetermining financial eligibility; and

(II) takes steps to verify assets through means other than by requiring documentation from parents and applicants except in individual cases of discrepancies or where otherwise justified.


[214] Bill: "Children's Health Insurance Program Reauthorization Act of 2009." Signed into law by Barack Obama on February 4, 2009 (became Public Law No: 111-003). http://www.gpo.gov/fdsys/pkg/BILLS-111hr2enr/pdf/BILLS-111hr2enr.pdf


Page 99 (in pdf):


TITLE VII—REVENUE PROVISIONS

SEC. 701. INCREASE IN EXCISE TAX RATE ON TOBACCO PRODUCTS.

(a) CIGARS.—Section 5701(a) of the Internal Revenue Code of 1986 is amended—

(1) by striking "$1.828 cents per thousand ($1.594 cents per thousand on cigars removed during 2000 or 2001)" in paragraph (1) and inserting "$50.33 per thousand",

(2) by striking "20.719 percent (18.063 percent on cigars removed during 2000 or 2001)" in paragraph (2) and inserting "52.75 percent", and

(3) by striking "$48.75 per thousand ($42.50 per thousand on cigars removed during 2000 or 2001)" in paragraph (2) and inserting "40.26 cents per cigar".

(b) CIGARETTES.—Section 5701(b) of such Code is amended—

(1) by striking "$19.50 per thousand ($17 per thousand on cigarettes removed during 2000 or 2001)" in paragraph (1) and inserting "$50.33 per thousand", and

(2) by striking "$40.95 per thousand ($35.70 per thousand on cigarettes removed during 2000 or 2001)" in paragraph (2) and inserting "$105.69 per thousand".

(c) CIGARETTE PAPERS.—Section 5701(c) of such Code is amended by striking "1.22 cents (1.06 cents on cigarette papers removed during 2000 or 2001)" and inserting "3.15 cents".

(d) CIGARETTE TUBES.—Section 5701(d) of such Code is amended by striking "2.44 cents (2.13 cents on cigarette tubes removed during 2000 or 2001)" and inserting "6.30 cents".

(e) SMOKELESS TOBACCO. …


[215] Calculated with data from:


a) Vote 50: "Children's Health Insurance Program Reauthorization Act of 2009." U.S. House of Representatives, February 4, 2009. http://clerk.house.gov/evs/2009/roll050.xml


b) Vote 31: "Children's Health Insurance Program Reauthorization Act of 2009." U.S. Senate, January 29, 2009. http://www.senate.gov/...

 

Combined vote totals from both House of Congress:


Party Voted YES Voted NO
Republican 49 23% 165 77%
Democrat 305 99% 2 1%
Independent 2 100% 0 0%


NOTE: Results do not include those not voting or those who voted "Present."


[216] Article: "Healthcare Reform Legislation Signed Into Law." By Jerry Klepner and Briana Nord. Dialysis & Transplantation, June 18, 2010. http://onlinelibrary.wiley.com/doi/10.1002/dat.20455/full


[N]egotiations on a final bill were stalled when, on January 19, Republican Scott Brown was elected to the Massachusetts Senate seat vacated by the death of Senator Edward Kennedy. Brown's election effectively took away the Senate Democratic leadership's 60th vote in support of healthcare reform legislation. Without the filibuster-proof 60 votes in the Senate, Democrats would not have been able to overcome the procedural hurdles to passing a final House-Senate compromise bill without Republican votes. …


The White House and House and Senate Democratic leadership agreed on a two-step process in which the House would pass the Senate-approved healthcare reform bill and then vote on a package of changes to the bill negotiated by Democrats in both chambers. Under budget reconciliation, the Senate would be able pass the package of changes with a simple majority vote [i.e., 50 votes instead of 60].


[217] Calculated with data from:


a) Vote 165: "Patient Protection and Affordable Care Act." U.S. House of Representatives, March 21, 2010. http://clerk.house.gov/evs/2010/roll165.xml


b) Vote 396: "Patient Protection and Affordable Care Act." U.S. Senate, December 24, 2009. http://www.senate.gov/...

 

Combined vote totals from both House of Congress:


Party Voted YES Voted NO
Republican 0 0% 178  100%
Democrat 277 79% 73 21%
Independent 2 100% 0 0%


NOTE: Results do not include those not voting or those who voted "Present."


[218] Calculated with data from:


a) Vote 194: "Health Care and Education Reconciliation Act of 2010." U.S. House of Representatives, March 25, 2010. http://clerk.house.gov/evs/2010/roll194.xml


b) Vote 105: "Health Care and Education Reconciliation Act of 2010." U.S. Senate, March 25, 2010. http://www.senate.gov/...

 

Combined vote totals from both House of Congress:


Party Voted YES Voted NO
Republican 0 0% 215 100%
Democrat 274 89% 35 11%
Independent 2 100% 0 0%


NOTE: Results do not include those not voting or those who voted "Present."


[219] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


NOTE: This bill contains 906 pages.


[220] House Resolution 4872: "Health Care and Education Reconciliation Act." Signed into law by Barack Obama on March 30, 2010 (became Public Law No: 111-152). http://www.gpo.gov/fdsys/pkg/PLAW-111publ152/pdf/PLAW-111publ152.pdf


NOTE: This bill contains 1,029 pages.


[221] "2010 Actuarial Report on the Financial Outlook for Medicaid." By Christopher J. Truffer and others. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, December 21, 2010. http://www.cms.gov/ActuarialStudies/downloads/MedicaidReport2010.pdf


Page 2: "Beginning in 2014, the Affordable Care Act expands Medicaid eligibility to all individuals under age 65 in families with income below 138 percent of the Federal Poverty Level (FPL).22 … The Affordable Care Act technically specifies an upper income threshold of 133 percent of the FPL but also allows a 5-percent income disregard, making the effective threshold 138 percent."


Page 28:


The effective participation rate of persons who would have been uninsured for a full year, but are newly eligible for Medicaid as a result of the Affordable Care Act, is assumed to be 97 percent. This assumed participation rate is significantly higher than actual Medicaid participation rates to date and is based on the anticipated impacts of sections of the Affordable Care Act intended to make the process of enrolling easier. In particular, the legislation establishes State or federally operated health insurance exchanges that, among other responsibilities, will facilitate the determination of individuals' and families' eligibility for Federal financial assistance for health insurance, either through Medicaid or through the Federal premium and cost-sharing subsidies for private health insurance plans. The exchanges are assumed to perform this role effectively and, for those found to qualify for Medicaid, to assist the application and enrollment process. In this role, the exchanges would also serve as a valuable new resource for health providers who seek assistance in enrolling eligible persons in Medicaid. In addition, we anticipate that the more widespread availability of financial assistance under the Affordable Care Act (for individuals and families with incomes up to 400 percent of FPL) will reduce any stigma associated with receipt of such assistance through Medicaid.


Page iv:


The most significant change to Medicaid is the expansion of Medicaid eligibility beginning in 2014. This expansion, together with greater participation by individuals eligible under current rules, is projected to add 11.6 million people to enrollment in FY [fiscal year] 2014 and almost 20 million people by FY 2019, 21 percent and 34 percent, respectively, compared to pre-Affordable Care Act estimates. These increases reflect both the greater proportion of the population that will be eligible for Medicaid and an assumption that the new State health insurance exchanges will be very effective in assisting enrollment in Medicaid. Of the new enrollees … about 78 percent are projected to be eligible only under the new rules beginning in 2014.


[222] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"


CALCULATION: $22,350 × 138% = $30,843


[223] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


Page 162 (in pdf):


TITLE II—ROLE OF PUBLIC PROGRAMS

Subtitle A—Improved Access to Medicaid …

SEC. 2002. INCOME ELIGIBILITY FOR NONELDERLY DETERMINED USING MODIFIED GROSS INCOME. …

(C) NO ASSETS TEST.—A State shall not apply any assets or resources test for purposes of determining eligibility for medical assistance under the State plan or under a waiver of the plan.


[224] Letter: "Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers." By John D. Shatto and M. Kent Clemens. United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, May 13, 2011. http://www.cms.gov/...

 

Page 6:


The increasing differential between Medicare and private payment rates is due to the productivity adjustments in 2012 and later for the Medicare payment updates (and, to a lesser degree, to the other, smaller downward adjustments in 2010-2019 specified by the ACA in addition to the productivity adjustments). The smaller UPL [upper payment limit] established by the Medicare rates forces a similar differential for Medicaid payments. By the end of the long-range projection period [2085], Medicare and Medicaid payment rates for inpatient hospital services would both represent roughly 33 percent of the average level for private health insurance.


[225] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


Page 265-266:


STATEMENT OF ACTUARIAL OPINION …


While the Part B projections in this report are reasonable in their portrayal of future costs under current law, they are not reasonable as an indication of actual future costs. …


Further, while the Affordable Care Act makes important changes to the Medicare program and substantially improves its financial outlook, there is a strong likelihood that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree—or even approach such a level—as a result of the labor-intensive nature of these services.


Without major changes in health care delivery systems, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to far higher costs for Medicare in the long range than those projected under current law.


[226] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE … Subtitle E—Ensuring Medicare Sustainability … SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD …

(b) PURPOSE.—It is the purpose of this section to, in accordance with the following provisions of this section, reduce the per capita rate of growth in Medicare spending—

(1) by requiring the Chief Actuary of the Centers for Medicare and Medicaid Services to determine in each year to which this section applies (in this section referred to as 'a determination year') the projected per capita growth rate under Medicare for the second year following the determination year (in this section referred to as 'an implementation year');

(2) if the projection for the implementation year exceeds the target growth rate for that year, by requiring the Board to develop and submit during the first year following the determination year (in this section referred to as 'a proposal year') a proposal containing recommendations to reduce the Medicare per capita growth rate to the extent required by this section; and

(3) by requiring the Secretary to implement such proposals unless Congress enacts legislation pursuant to this section. …

(c) BOARD PROPOSALS.— …

(2) PROPOSALS.— …

(A) REQUIREMENTS.—Each proposal submitted under this section in a proposal year shall meet each of the following requirements:

(i) If the Chief Actuary of the Centers for Medicare and Medicaid Services has made a determination under paragraph (7)(A) in the determination year, the proposal shall include recommendations so that the proposal as a whole (after taking into account recommendations under clause (v)) will result in a net reduction in total Medicare program spending in the implementation year that is at least equal to the applicable savings target established under paragraph (7)(B) for such implementation year. …

(g) BOARD MEMBERSHIP; TERMS OF OFFICE; CHAIRPERSON; REMOVAL.—

(1) MEMBERSHIP.—

(A) IN GENERAL.—The Board shall be composed of—

(i) 15 members appointed by the President, by and with the advice and consent of the Senate …


[227] Report: "The Independent Payment Advisory Board: A New Approach to Controlling Medicare Spending." By Jack Ebler, Tricia Neuman, and Juliette Cubanski. Henry J. Kaiser Family Foundation, April 2011. http://www.kff.org/medicare/upload/8150.pdf


Page 3: "Prior to 2020, the growth target is based on a measure of inflation, and in subsequent years, it is based on the per capita growth in the economy (gross domestic product (GDP) plus one percentage point)."


Page 6: "For 2015 through 2019, the target for Medicare spending per capita is the average of general and medical inflation: specifically, the average of the projected percentage increase in the consumer price index for all Urban Consumers (CPI-U) and the medical care expenditure category of the CPI-U. For 2020 and later years, the target for Medicare spending per capita is the increase in the gross domestic product (GDP) plus one percentage point, which historically has increased at a higher rate than the CPI-based measures."


[228] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


Page 834 (in pdf): "NAME CHANGE.—Any reference in the provisions of, or amendments made by, section 3403 to the 'Independent Medicare Advisory Board' shall be deemed to be a reference to the Independent Payment Advisory Board."


[229] Report: "The Independent Payment Advisory Board: A New Approach to Controlling Medicare Spending." By Jack Ebler, Tricia Neuman, and Juliette Cubanski. Henry J. Kaiser Family Foundation, April 2011. http://www.kff.org/medicare/upload/8150.pdf


Page 3: "The recommendations made by IPAB move to the Congress for fast-track consideration. If Congress does not act in the required timeframe, the Secretary is required to implement the Board's recommendations, also on a fast-track basis."


[230] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE … Subtitle E—Ensuring Medicare Sustainability … SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD …

(d) CONGRESSIONAL CONSIDERATION.—

(1) INTRODUCTION.—

(A) IN GENERAL.—On the day on which a proposal is submitted by the President to the House of Representatives and the Senate under subsection (c)(4), the legislative proposal (described in subsection (c)(3)(B)(iv)) contained in the proposal shall be introduced (by request) in the Senate by the majority leader of the Senate or by Members of the Senate designated by the majority leader of the Senate and shall be introduced (by request) in the House by the majority leader of the House or by Members of the House designated by the majority leader of the House. …

(3) LIMITATION ON CHANGES TO THE BOARD RECOMMENDATIONS.—

(A) IN GENERAL.—It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, or amendment, pursuant to this subsection or conference report thereon, that fails to satisfy the requirements of subparagraphs (A)(i) and (C) of subsection (c)(2). …

(4) EXPEDITED PROCEDURE.—

(A) CONSIDERATION.—A motion to proceed to the consideration of the bill in the Senate is not debatable.

(B) AMENDMENT …

(iv) AMENDMENT NOT IN ORDER.—It shall not be in order to consider an amendment that would cause the bill to result in a net reduction in total Medicare program spending in the implementation year that is less than the applicable savings target established under subsection (c)(7)(B) for such implementation year.

(v) WAIVER AND APPEALS.—This paragraph may be waived or suspended in the Senate only by the affirmative vote of three-fifths of the Members, duly chosen and sworn. An affirmative vote of three-fifths of the Members of the Senate, duly chosen and sworn, shall be required in the Senate to sustain an appeal of the ruling of the Chair on a point of order raised under this section.

(C) CONSIDERATION BY THE OTHER HOUSE.—

(i) IN GENERAL.—The expedited procedures provided in this subsection for the consideration of a bill introduced pursuant to paragraph (1) shall not apply to such a bill that is received by one House from the other House if such a bill was not introduced in the receiving House. …

(F) VETO.—If the President vetoes the bill debate on a veto message in the Senate under this subsection shall be 1 hour equally divided between the majority and minority leaders or their designees.

(5) RULES OF THE SENATE AND HOUSE OF REPRESENTATIVES.—

This subsection and subsection (f)(2) are enacted by Congress—

(A) as an exercise of the rulemaking power of the Senate and the House of Representatives, respectively, and is deemed to be part of the rules of each House, respectively, but applicable only with respect to the procedure to be followed in that House in the case of bill under this section, and it supersedes other rules only to the extent that it is inconsistent with such rules; and

(B) with full recognition of the constitutional right of either House to change the rules (so far as they relate to the procedure of that House) at any time, in the same manner, and to the same extent as in the case of any other rule of that House. …

(e) IMPLEMENTATION OF PROPOSAL.—

(1) IN GENERAL.—Notwithstanding any other provision of law, the Secretary shall, except as provided in paragraph (3), implement the recommendations contained in a proposal submitted by the President to Congress pursuant to this section on August 15 of the year in which the proposal is so submitted. …

(3) EXCEPTION.—The Secretary shall not be required to implement the recommendations contained in a proposal submitted in a proposal year by the President to Congress pursuant to this section if—

(A) prior to August 15 of the proposal year, Federal legislation is enacted that includes the following provision: 'This Act supercedes the recommendations of the Board contained in the proposal submitted, in the year which includes the date of enactment of this Act, to Congress under section 1899A of the Social Security Act. …


[231] Constitution of the United States. Signed September 17, 1787. http://justfacts.com/constitution.asp


Article I, Section 7:


[Clause 2] Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law.


[232] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE … Subtitle E—Ensuring Medicare Sustainability … SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD …

(h) VACANCIES; QUORUM; SEAL; VICE CHAIRPERSON; VOTING ON REPORTS.—

(1) VACANCIES.—No vacancy on the Board shall impair the right of the remaining members to exercise all the powers of the Board.

(2) QUORUM.—A majority of the appointed members of the Board shall constitute a quorum for the transaction of business, but a lesser number of members may hold hearings.


[233] Article: "Sebelius Confirmed as Secretary of HHS." By Shailagh Murray. Washington Post, April 28, 2009. http://voices.washingtonpost.com/...


"The Senate approved the nomination of Kathleen Sebelius to head the Department of Health and Human Services, filling the final seat in President Obama's Cabinet on the eve of his 100th day in office."


[234] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE … Subtitle E—Ensuring Medicare Sustainability … SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD …

(c) BOARD PROPOSALS …

(5) CONTINGENT SECRETarial DEVELOPMENT OF PROPOSAL.

— If, with respect to a proposal year, the Board is required, to but fails, to submit a proposal to the President by the deadline applicable under paragraph (3)(A)(i), the Secretary shall develop a detailed and specific proposal that satisfies the requirements of subparagraphs (A) and (C) (and, to the extent feasible, subparagraph (B)) of paragraph (2) and contains the information required paragraph (3)(B)).


[235] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE … Subtitle E—Ensuring Medicare Sustainability … SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD …

(c) BOARD PROPOSALS …

(2) PROPOSALS.—

(A) REQUIREMENTS.—Each proposal submitted under this section in a proposal year shall meet each of the following requirements: …

(ii) The proposal shall not include any recommendation to ration health care, raise revenues or Medicare beneficiary premiums under section 1818, 1818A, or 1839, increase Medicare beneficiary cost-sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility criteria. …

(B) ADDITIONAL CONSIDERATIONS.—In developing and submitting each proposal under this section in a proposal year, the Board shall, to the extent feasible—

(i) give priority to recommendations that extend Medicare solvency;

(ii) include recommendations that …

(II) protect and improve Medicare beneficiaries' access to necessary and evidence-based items and services …


NOTE: "Evidence-based" medicine is sometimes used to ration health care. The term is defined and explicated in the next two footnotes.


[236] Book: Healthcare Management Dictionary. By Annie Phillips. Radcliffe Medical Press, 2003. Page 58:


Evidence-based medicine

The systematic analysis of data in order to assess the clinical efficacy and cost-effectiveness of treatments. First described in the British Medical Journal in 1996 as 'the conscientious, explicit and judicious use of current best evidence in making decisions about the care of individual patients', it is a discipline that aims to invalidate previously accepted diagnostic tests and therapies and replace them with new ones that are more powerful, accurate, efficacious, and safe.


The practice of evidence-based medicine means integrating individual and clinical expertise with the best available external clinical evidence from systematic research.1 This process underpins, for example, the work of the [U.K.'s] National Institute for Clinical Excellence (NICE), which decides the technologies and treatments that should be made available on the NHS [National Health Service].


[237] Book: Rationing of Medical Services in Europe: An Empirical Study. Edited by J.-Matthias Graf von der Schulenburg and Michael Blanke. IOS Press, 2004.


Chapter I: "Rationing Health Care in Europe – Finland." By Janne Martikainen and Hannu Valtonen.


Page 18: "An unstructured question was used to explore which form of rationing professionals themselves believed to be the most effective in controlling cost escalation, since 78% of them believed that cost escalation can be controlled somehow. The most preferred forms of rationing were priority setting [20.0%], preventative treatments [15.5%] and evidence based medicine [8.9%] (Table 14). In the Finnish publicity, instead of the term 'rationing' the term 'prioritization' has been used since the beginning of the 90s."


[238] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


TITLE III—IMPROVING THE QUALITY AND EFFICIENCY OF HEALTH CARE … Subtitle E—Ensuring Medicare Sustainability … SEC. 3403. INDEPENDENT MEDICARE ADVISORY BOARD …

(e) IMPLEMENTATION OF PROPOSAL.—

(5) LIMITATION ON REVIEW.—There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the implementation by the Secretary under this subsection of the recommendations contained in a proposal.


[239] Article: "Obamacare's Other Unconstitutional Provision." By Clint Bolick. Hoover Institution, December 16, 2011. http://www.hoover.org/...


The law directs IPAB—a 15-member commission appointed by the president with Senate confirmation, and whose composition (unlike most other agencies) need not be bipartisan—to make annual "legislative proposals" starting in 2014 that will result in reducing the per capita rate of growth in Medicare. The law says that certain proposals are off-limits, including any that "ration health care, raise revenues or increase Medicare beneficiary cost sharing (including deductibles, coinsurance, and copayments), or otherwise restrict benefits or modify eligibility requirements."


There are three whopping problems with this directive. First, if Medicare beneficiaries cannot be required to pay more and their benefits cannot be reduced, there is only one way to achieve cost-containment: to reduce payments to physicians and hospitals. Those reductions will further diminish the number of Medicare providers and/or reduce the quality of care—in essence, creating precisely the de facto rationing of health-care services the bill supposedly prohibits.


Second, crucial terms such as "rationing" are undefined, and the requirements are confusing and contradictory. Elsewhere, the law directs IPAB to "protect and improve Medicare beneficiaries' access to necessary and evidence-based items and services." So IPAB is not allowed to ration health care, but it must decide which services are "necessary and evidence-based"—which, of course, is rationing.


[240] Report: "Justification of Estimates for Appropriations Committees, Fiscal Year 2012."

Centers for Medicare and Medicaid Services, U.S. Department of Health & Human Services. http://www.hhs.gov/about/FY2012budget/cmsfy12cj_revised.pdf


Page 154: "More recently, the Affordable Care Act extended funding for CHIP through FY 2015, providing an additional $28.8 billion in budget authority over the baseline."


Page 157: "[T]he Affordable Care Act extends Federal funding for CHIP through FY 2015, appropriating $19.1 billion in FY 2014 and $21.1 billion in FY 2015."


[241] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Summary:


[The Affordable Care Act] ... will enable and support states' creation by 2014 of "American Health Benefit Exchanges." An exchange cannot be an insurer, but will provide eligible individuals and small businesses with access to insurers' plans in a comparable way. The exchange will consist of a selection of private plans as well as "multi-state qualified health plans," administered by the Office of Personnel Management. Individuals will only be eligible to enroll in an exchange plan if they are not enrolled in Medicare, Medicaid, or acceptable employer coverage as a full-time employee. Based on income, certain individuals may qualify for a tax credit toward their premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange.


[242] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 5:


The refundable premium tax credits in section 1401 of the PPACA [the Patient Protection and Affordable Care Act] (as amended by section 1001 of the Reconciliation Act) would limit the [health insurance] premiums paid by individuals with incomes up to 400 percent of the FPL to a range of 2.0 to 9.5 percent of their income and would cost an estimated $451 billion through 2019. An estimated 25 million Exchange enrollees (79 percent) would receive these Federal premium subsidies. The cost-sharing credits would reimburse individuals and families with incomes up to 400 percent of the FPL for a portion of the amounts they pay out-of-pocket for health services, as specified in section 1402, as amended. These credits are estimated to cost $55 billion through 2019.


The PPACA establishes the Exchange premium subsidies during 2014-2018 in such a way that the reduced premiums payable by those with incomes below 400 percent of FPL would maintain the same share of total premiums over time. As a result, the Federal premium subsidies for a qualifying individual would grow at the same pace as per capita health care costs during this period. Because the cost-sharing assistance is based on a percentage of health care costs incurred by qualifying individuals and families, average Federal expenditures for this assistance would also increase at the same rate as per capita health care costs. After 2018, if the Federal cost of the premium and cost-sharing subsidies exceeded 0.504 percent of GDP, then the share of Exchange health insurance premiums paid by enrollees below 400 percent of the FPL would increase such that the Federal cost would stay at approximately 0.504 percent of GDP. We estimate that the subsidy costs in 2018 would represent about 0.518 percent of GDP, with the result that the enrollee share of the total premium would generally increase in 2019 and later.


NOTE: Although the statement above does not explicitly designate the year in which an "estimated 25 million Exchange enrollees … would receive these Federal premium subsidies," the year can be deduced by data in Table 2 (on page 24 of the pdf file). For the year 2019, this table specifies 31.6 million Exchange enrollees. As explained above, "79 percent" of these would receive subsidies. Since 79% of 31.6 million equals 25.0 million, the year 2019 is implied above.


[243] Web page: "2011 HHS Poverty Guidelines." U.S. Department of Health & Human Services. Last revised January 21, 2011. http://aspe.hhs.gov/poverty/11poverty.shtml


"Persons in Family [=] 3 … 48 Contiguous States and D.C. [=] $18,530 … Alaska [=] $23,160 … Hawaii [=] $21,320"

CALCULATION: $18,530 × 400% = $74,120


"Persons in Family [=] 4 … 48 Contiguous States and D.C. [=] $22,350 … Alaska [=] $27,940… Hawaii [=] $25,710"

CALCULATION: $22,350 × 400% = $89,400


"Persons in Family [=] 5 … 48 Contiguous States and D.C. [=] $26,170 … Alaska [=] $32,720 … Hawaii [=] $30,100"

CALCULATION: $26,170 × 400% = $104,680


[244] Report: "CBO's Analysis of the Major Health Care Legislation Enacted in March 2010." By Douglas W. Elmendorf. Congressional Budget Office, March 30, 2011. http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-healthcarelegislation.pdf


Page 19: "Table 3 Continued. Estimated Effects of PPACA and the Reconciliation Act on Insurance Coverage (Millions of nonelderly people, by calendar year) 2014 … Average exchange subsidy per subsidized enrollee (Dollars) [=] $4,610"


[245] Report: "Prescription for change 'filled': Tax provisions in the Patient Protection and Affordable Care Act, Updated to reflect changes approved in the Reconciliation Act of 2010." By Clint Stretch and others. Deloitte, March 30, 2010. http://www.deloitte.com/...


Page 23:


Employer penalties and other requirements


The Act contains many provisions affecting employers. They generally fall into two broad categories. The first category is a set of penalties that must be paid by certain large employers that either do not offer health insurance or offer health insurance that employees opt out of in favor of acquiring coverage through an exchange. The second category is comprised of changes that employers may be required to make to their health plans. In general, however, the Act provides a broad grandfathering provision for plans in existence on the date of enactment.


[246] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Page 7:


PPACA [the Patient Protection and Affordable Care Act] does not mandate an employer to provide employees with coverage; however, beginning in 2014, it does impose requirements on certain employers.15 An employer with at least 50 full-time equivalents16 (FTEs) that does not provide coverage may be subject to a penalty if at least one of its full-time employees receives a premium credit. An employer with at least 50 FTEs that provides access to coverage but fails to meet certain requirements may also be subject to a penalty. The number of FTEs excludes those full-time seasonal employees who work for less than 120 days during the year. The penalty for an applicable employer who provides coverage is similar to the penalty assessed against an employer who does not provide coverage. An employer may be subject to a penalty only in relation to its full-time workers, defined as those working an average of at least 30 hours per week. An employer is not subject to a penalty in relation to its part-time workers (those working less than an average of 30 hours per week). For additional information besides that provided below, see CRS Report R41159, Summary of Potential Employer Penalties Under PPACA (P.L. 111-148).


Pages 7-8:


Requirements and Penalties for an Employer Offering Health Insurance


For an employer that chooses to offer health insurance, the following rules would apply:


• Current employment-based plans will be considered grandfathered plans.

• A small employer may offer full-time employees and their dependents coverage in an exchange plan.

• A large employer may offer full-time employees the opportunity to enroll in a group health plan.

• An employer will not be treated as meeting the employer requirements if at least one full-time employee receives premium credits in an exchange plan because the employee's required contribution exceeds 9.5% of the employee's household income or if the plan offered by the employer pays for less than 60% of covered health care expenses.17

• An employer must file a return providing the name of each individual for whom they provide the opportunity to enroll in minimum essential coverage, the length of any waiting period, the number of months that coverage was available, the monthly premium for the lowest cost option, the plan's share of covered health care expenses paid for, the number for full-time employees, the number of months employees were covered (if any), and any other information required by the Secretary.18 The employer must provide notice to employees about the existence of the exchange, including a description of the services provided by the exchange.19

• An employer will not pay a penalty for any part-time workers (those working less than 30 hours), even if that employee receives a premium credit.


In 2014, the monthly penalty assessed to the employer for each full-time employee who receives a premium credit will be 1/12 of $3,000 for any applicable month. However, the total penalty for an employer will be limited to the total number of the firm's full-time employees minus 30, multiplied by 1/12 of $2,000 for any applicable month. After 2014, the penalty amounts will be indexed by a premium adjustment percentage for the calendar year.


Finally those firms with more than 200 full-time employees that offer coverage will automatically enroll new full-time employees in a plan (and continue enrollment of current employees).20 Automatic enrollment programs will be required to include adequate notice and the opportunity for an employee to opt out.


Requirements and Penalties for an Employer Not Offering Health Insurance


A firm with at least 50 FTEs that chooses not to offer health insurance to its full-time employees (and their dependents) will be subject to a penalty if any of its full-time employees receive premium credits in an exchange plan. In 2014, the penalty assessed to the employer will be equal to the number of full-time employees minus 30 multiplied by 1/12 of $2,000, for any applicable month. After 2014, the penalty payment amount would be indexed by a premium adjustment percentage for the calendar year.


Employers that do not offer coverage must also file a return stating that they do not offer coverage, the number of full-time employees, and other information required by the Secretary. They must provide notice to employees about the existence of the exchange, including a description of the services provided by the exchange.21


Page 9:


Free Choice Vouchers


An employer offering minimum essential coverage who pays any portion of the costs of such plan will provide free choice vouchers to each qualified employee.22 A qualified employee is defined as an employee whose required contribution to the employer plan is greater than 8% and less than 9.5% of the employee's household income for the taxable year, whose household income is not greater than 400% of the FPL for the relevant family size, and who does not participate in the plan offered by the employer. Beginning after 2014, the 8% and 9.5% would be indexed by the rate of premium growth.


The amount of a voucher will be equal to the monthly portion of the cost of the employer plan that would have been paid by the employer if the employee were covered under the plan for which the employer pays the largest portion of plan costs, for either self or, if elected by the employee, family coverage.


An exchange will credit the amount of a voucher to the monthly premium of a qualified health plan in which the qualified employee is enrolled, and the employer will pay the exchange the credited amount. If the amount of the voucher exceeds the premium, the excess will be paid to the employee. A individual receiving a free choice voucher will not be eligible for the exchange premium credits or cost-sharing subsidies described later in this report.23 No penalty will be imposed on an employer with respect to any employee who is provided with a voucher.


[247] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 5: "Employer penalties [for not providing employees with health insurance] would be $2,000 per employee in 2014, generally, which is substantially less than the cost of providing health insurance coverage. The relationship between penalties and premiums is much more complicated for individuals than for employers; still, for many individuals the applicable penalty would be considerably smaller than the cost of coverage."


[248] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Page 6: "Beginning in 2014, PPACA [the Patient Protection and Affordable Care Act] includes a mandate for most individuals to have health insurance,9 or potentially pay a penalty for noncompliance.10 Individuals will be required to maintain minimum essential coverage for themselves and their dependents. Those who do not meet the mandate will be required to pay a penalty for each month of noncompliance."


[249] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 6: "The penalty amounts for noncovered individuals will be indexed over time by the CPI (or, in certain instances, by growth in income) and would normally increase more slowly than health care costs."


Page 8:


For the estimated 23 million people who would remain uninsured in 2019, roughly 5 million are undocumented aliens who would be ineligible for Medicaid or the Exchange coverage subsidies under the health reform legislation. The balance of 18 million would choose not to be insured and to pay the penalty (if applicable) associated with the individual mandate. For the most part, these would be individuals with relatively low health care expenses for whom the individual or family insurance premium would be significantly in excess of any penalty and their anticipated health benefit value. In other instances, as happens currently, some people would not enroll in their employer plans or take advantage of the Exchange opportunities even though it would be in their best financial interest to do so.


[250] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 5: "Employer penalties [for not providing employees with health insurance] would be $2,000 per employee in 2014, generally, which is substantially less than the cost of providing health insurance coverage. The relationship between penalties and premiums is much more complicated for individuals than for employers; still, for many individuals the applicable penalty would be considerably smaller than the cost of coverage."


[251] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 7:


For many individuals, the penalty amounts for not having insurance coverage were not sufficiently large to have a sizable impact on the coverage decision. Also, in this regard, individuals or families would not be subject to a penalty for failing to enroll in an Exchange plan if the "bronze" premium level (reduced by the premium tax credit, if applicable) would exceed 8 percent of income. We estimate that this provision would exempt individuals and families with incomes between about 400 percent and 542 percent of the FPL, representing about 16 percent of the non-aged population.


[252] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


Pages 36, 43 (in pdf):


TITLE I—QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS … Subtitle C—Quality Health Insurance Coverage for All Americans … PART I—HEALTH INSURANCE MARKET REFORMS … SUBPART I—GENERAL REFORM …

Sec. 2704. Prohibition of preexisting condition exclusions or other discrimination based on health status.

(a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage may not impose any preexisting condition exclusion with respect to such plan or coverage. …

SEC. 2708. PROHIBITION ON EXCESSIVE WAITING PERIODS. A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not apply any waiting period (as defined in section 2704(b)(4)) that exceeds 90 days.


[253] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Page 3: "Immediate Individual and Group Market Reforms … providing coverage for preexisting health conditions for enrollees under age 19…."


Pages 11-12:


The law will apply new federal health insurance standards to group health plans as well as health insurance coverage offered in the individual, small group, and large group markets (depending on the standard), effective for plan years beginning on or after January 1, 2014. Among the insurance reforms are provisions that will subject new plans to the following requirements: …


• Prohibit group health plans (new and grandfathered) and issuers in the individual and group markets from excluding coverage for preexisting health conditions.34 (A "preexisting health condition" is a medical condition that was present before the date of enrollment for health coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. Excluding coverage for preexisting conditions refers to the case in which an applicant for coverage is offered a health insurance policy but that policy does not provide benefits for certain medical conditions.)


• Prohibit group health plans and issuers in the individual and group markets from basing eligibility for coverage on health status-related factors.35 (Such factors include health status, medical condition (including both physical and mental illness), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), disability, and any other health status-related factor determined appropriate by the Secretary). …


• Prohibit group health plans and issuers in the group market (new and grandfathered) from imposing a waiting period greater than 90 days.37 (A "waiting period" refers to the time period that must pass before an individual is eligible to use health benefits.)


• Require individual and group health insurance issuers to offer coverage on a guaranteed issue and guaranteed renewal basis.38 ("Guaranteed issue" in health insurance is the requirement that an issuer accept every applicant for health coverage. "Guaranteed renewal" in health insurance is the requirement on an issuer to renew group coverage at the option of the plan sponsor [e.g., employer] or individual coverage at the option of the enrollee. Guaranteed issue and renewal alone would not guarantee that the insurance offered is affordable.)


• Require issuers in the individual and small group markets to determine premiums for such coverage using adjusted community rating rules.39 ("Adjusted, or modified, community rating" prohibits issuers from pricing health insurance policies based on health factors, but allows it for other key characteristics such as age or gender.) Under the law, premiums will vary based only on the following risk factors: self-only or family enrollment; rating area,40 as specified by the state; age (by no more than a 3:1 ratio across age rating bands established by the Secretary, in consultation with the National Association of Insurance Commissioners (NAIC)), and tobacco use (by no more than 1.5:1 ratio).


[254] House Resolution 3590: "Patient Protection and Affordable Care Act." Signed into law by Barack Obama on March 23, 2010 (became Public Law No: 111-148). http://www.gpo.gov/...


Page 37 (in pdf):


TITLE I—QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS … Subtitle C—Quality Health Insurance Coverage for All Americans … PART I—HEALTH INSURANCE MARKET REFORMS … SUBPART I—GENERAL REFORM …

Sec. 2701. Fair health insurance premiums.

(a) PROHIBITING DISCRIMINATORY PREMIUM RATES.—

(1) IN GENERAL.—With respect to the premium rate charged by a health insurance issuer for health insurance coverage offered in the individual or small group market—

(A) such rate shall vary with respect to the particular plan or coverage involved only by—

(i) whether such plan or coverage covers an individual or family;

(ii) rating area, as established in accordance with paragraph (2);

(iii) age, except that such rate shall not vary by more than 3 to 1 for adults (consistent with section 2707(c)); and

(iv) tobacco use, except that such rate shall not vary by more than 1.5 to 1; and

(B) such rate shall not vary with respect to the particular plan or coverage involved by any other factor not described in subparagraph (A).

(2) RATING AREA.—

(A) IN GENERAL.—Each State shall establish 1 or more rating areas within that State for purposes of applying the requirements of this title.

(B) SECRETarial REVIEW.—The Secretary shall review the rating areas established by each State under subparagraph (A) to ensure the adequacy of such areas for purposes of carrying out the requirements of this title. If the Secretary determines a State's rating areas are not adequate, or that a State does not establish such areas, the Secretary may establish rating areas for that State.


Pages 13-14 (in pdf):


TITLE I—QUALITY, AFFORDABLE HEALTH CARE FOR ALL AMERICANS … Subtitle A—Immediate Improvements in Health Care Coverage for All Americans … PART A—INDIVIDUAL AND GROUP MARKET REFORMS … SUBPART II—IMPROVING COVERAGE …

SEC. 2713. COVERAGE OF PREVENTIVE HEALTH SERVICES.

(a) IN GENERAL.—A group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for—

(1) evidence-based items or services that have in effect a rating of 'A' or 'B' in the current recommendations of the United States Preventive Services Task Force;

(2) immunizations that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved; and

(3) with respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in the comprehensive guidelines supported by the Health Resources and Services Administration.

(4) with respect to women, such additional preventive care and screenings not described in paragraph (1) as provided for in comprehensive guidelines supported by the Health Resources and Services Administration for purposes of this paragraph.

(5) for the purposes of this Act, and for the purposes of any other provision of law, the current recommendations of the United States Preventive Service Task Force regarding breast cancer screening, mammography, and prevention shall be considered the most current other than those issued in or around November 2009.


[255] Report: "Private Health Insurance Provisions in PPACA (P.L. 111-148)" By Hinda Chaikind and others. Congressional Research Service, April 15, 2010. http://bingaman.senate.gov/policy/crs_privhins.pdf


Page 35:


Effective for plan years beginning on or after six months after enactment, a group health plan, a grandfathered plan, and a health insurance issuer offering coverage in the group or individual markets that provided dependent coverage must extend that coverage to adult children until the individual is 26 years of age.113 This will not apply to a child of the child receiving dependent coverage. For group plans that are grandfathered, the coverage is limited to those adult children that do not have an offer of coverage from an employer.114


[256] Report: "Prescription for change 'filled': Tax provisions in the Patient Protection and Affordable Care Act, Updated to reflect changes approved in the Reconciliation Act of 2010." By Clint Stretch and others. Deloitte, March 30, 2010. http://www.deloitte.com/...


Page 24:


The Act imposes several other requirements affecting employer plans. Some are effective for plan years beginning six months after enactment (January 1, 2011, for calendar year plans), while others are not effective until 2014. The provisions with the earlier effective date include a prohibition against lifetime or unreasonable annual limits, a requirement to cover preventive services and immunizations without any cost sharing, and a requirement that all plans offering dependent coverage allow unmarried children to remain covered under a parent's plan through age 26. Beginning in 2014 … all annual limits will be prohibited….


[257] Article: "Sebelius Confirmed as Secretary of HHS." By Shailagh Murray. Washington Post, April 28, 2009. http://voices.washingtonpost.com/...


"The Senate approved the nomination of Kathleen Sebelius to head the Department of Health and Human Services, filling the final seat in President Obama's Cabinet on the eve of his 100th day in office."


[258] Report: "Regulations Pursuant to the Patient Protection and Affordable Care Act (P.L. 111-148)." By Curtis W. Copeland, Congressional Research Service, April 13, 2010. http://www.ropesgray.com/files/upload/RegulationsPursuanttothePPACA.pdf


Summary: "The report indicates that PPACA [the Patient Protection and Affordable Care Act the Patient Protection and Affordable Care Act] gives federal agencies substantial responsibility and authority to "fill in the details" of the legislation through subsequent regulations. Although some regulations are required in 2010, it seems likely that other regulations will be issued for years, or even decades to come."


Page 1:


Federal regulations generally start with an act of Congress and are the means by which statutes are implemented and specific requirements are established. In Building a Legislative-Centered Public Administration, David H. Rosenbloom succinctly described why regulations are important, why Congress delegates rulemaking authority to federal agencies, and congressional responsibilities when such delegations are made:


Rulemaking and lawmaking are functional equivalents. Legislative (substantive) rules made by agencies have the force of law. When agencies make such rules, in effect they legislate.


Page 2: "This report identifies provisions in PPACA that require, permit, or contemplate rulemaking by federal agencies to implement the legislation. … Although these searches identified more than 40 regulatory provisions in PPACA, it is unclear whether they identified all such provisions in the act."


[259] Op-ed: "America's Most Powerful Woman." By Merrill Matthews. Investor's Business Daily, June 8, 2010. http://www.investors.com/...


And now Congress has handed Ms. Sebelius the authority to implement the Patient Protection and Affordable Care Act (aka, ObamaCare).


A quick search of the legislation reveals that the word "Secretary" appears nearly 3,000 times in the 2,700-page legislation. And the vast majority of those references are to the secretary of HHS.


Over and over again we see: "the Secretary shall establish"; "the Secretary shall promulgate regulations"; "the Secretary shall develop standards"; "the Secretary shall periodically review"; "as the Secretary deems are important"; "the Secretary may develop and impose appropriate penalties"; "the Secretary may adjust the rates"; "if the Secretary determines necessary"; and "the Secretary has the authority."


[260] Report: "New Entities Created Pursuant to the Patient Protection and Affordable Care Act." By Curtis W. Copeland. Congressional Research Service, July 8, 2010. http://op.bna.com/mdw.nsf/id/plon-87rjc7/$File/CRSreport.pdf


Summary


The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, March 23, 2010) creates, requires others to create, or authorizes dozens of new entities to implement the legislation. Some of these new entities are offices within existing cabinet departments and agencies, and are assigned certain administrative or representational duties related to the legislation. Other entities are new boards and commissions with particular planning and reporting responsibilities. Still others are advisory bodies that were created to study particular issues, offer recommendations, or both. Although PPACA describes some of these new organizations and advisory bodies in detail, in many cases it is currently impossible to know how much influence they will ultimately have over the implementation of the legislation.


This report describes dozens of new governmental organizations or advisory bodies that are mentioned in PPACA, but does not include other types of entities that were created by the legislation (e.g., various demonstration projects, grants, trust funds, programs, systems, formulas, guidelines, risk pools, websites, ratings areas, model agreements, or protocols). A table in the Appendix is organized in terms of entities (1) that were created by PPACA itself (e.g., through statutory language stating that an organization is "established" or "created"); (2) that PPACA requires the President to establish (e.g., "the President shall establish"); (3) that PPACA requires the Secretary of the Department of Health and Human Services (HHS) to establish (e.g., "the Secretary shall establish"); (4) that PPACA requires some other organization to establish; and (5) that PPACA authorizes to be established. For each entity listed, the table identifies (to the extent provided in the legislation) the relevant section of PPACA, the name of the entity, the date that the entity is required to be created and its location, the composition of the entity and its leadership, and the purpose and duties of the entity.


NOTE: The above-mentioned appendix (pages 20-38) lists 46 new governmental offices, centers, boards, councils, commissions, committees, advisory bodies, working groups, panels, task forces, and an institute.


[261] Determined with data from:


a) Report: "Estimated Revenue Effects Of The Amendment In The Nature Of A Substitute To H.R. 4872, The 'Reconciliation Act Of 2010,' As Amended, In Combination With The Revenue Effects Of H.R. 3590, The 'Patient Protection And Affordable Care Act ('PPACA'),' As Passed By The Senate, And Scheduled For Consideration By The House Committee On Rules On March 20, 2010." United States Congress, Joint Committee on Taxation, March 20, 2010. http://www.jct.gov/publications.html?func=startdown&id=3672

NOTES:

- Revenue provision # 6 (Require information reporting on payments to corporations) has been repealed and is thus subtracted from the total. [Article: "President Signs Repeal of Expanded 1099 Requirements." Journal of Accountancy, April 14, 2011. http://www.journalofaccountancy.com/web/20114071.htm]

- Not included in the table below are provisions with a "Negligible Revenue Effect" or a gain or loss of less than $50 million.


b) Report: "Prescription for change 'filled': Tax provisions in the Patient Protection and Affordable Care Act, Updated to reflect changes approved in the Reconciliation Act of 2010." By Clint Stretch and others. Deloitte, March 30, 2010. http://www.deloitte.com/...

NOTE: This report contains plain-language explanations of each provision, which Just Facts used to determine the tax category of each provision. (For example, is a provision considered a tax increase or the elimination of a targeted tax deduction?) There is room for subjectivity in making some of these determinations.


Provision Becomes

effective

Revenue

FY 2010-19

(billions)

Deloitte

explanation

(page #)

40% excise tax on health coverage in excess of $10,200/$27,500 … 2018 $32.0 9
Increase in additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses to 20% 2011 $1.4 21
Impose annual fee on manufacturers and importers of branded drugs … 2010 $27.0 11
Impose 2.3% excise tax on manufacturers and importers of certain medical devices 2013 $20.0 12
Impose annual fee on health insurance providers 2014 $60.1 10
$500,000 deduction limitation on taxable year remuneration to officers, employees, directors, and service providers of covered health insurance providers 2012 $0.6 14
Broaden Medicare Hospital Insurance Tax Base for High-Income Taxpayers… 2013 $210.2 5-7
Impose 10% excise tax on indoor tanning services 2010 $2.7 12
Codify economic substance doctrine and impose penalties for underpayments 2010 $4.5 18
Impose Fee on Insured and Self-Insured Health Plans; Patient-Centered Outcomes Research Trust Fund 2013-2019 $2.6 12
TOTAL   $361.1  


[262] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Page 2: "No less than 101 amendments were submitted to the Rules Committee, and no less than 10 amendments were submitted to the Budget Committee. As part of the Democrat majority's plan to silence the Republican minority, none of the following amendments were adopted in the Reconciliation bill."


[263] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Page 7:


Summary: … The OPTION Act will extend the tax deduction on health care premiums to all individuals, making health care expenses totally deductible for individuals, and not just businesses. All expenses currently allowed to be purchased with Health Savings Accounts (HSAs) will be tax deductible also. Individuals who have employer health care plans but still incur costs on medical expenses, deductibles, premiums, pharmaceuticals (prescribed, over the counter, etc.), or any medical related expenses would qualify for this deduction. Medicare recipients will also be allowed to deduct their Medicare supplemental insurance premiums.


Action: The amendment was rejected by a vote of 9 to 4. This amendment was previously introduced as stand-alone legislation on October 21, 2009, H.R. 3889, Offering Patients True and Individualized Options Now Act.


Page 8: "Summary: This amendment would allow for 100% deductibility of individual medical expenses. Action: The amendment was rejected by a vote of 9 to 4."


[264] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Pages 17-18:


Summary: This amendment would repeal the enactment of the Independent Medicare Advisory Board … which was renamed the Independent Payment Advisory Board (IPAB), made up of non-elected government bureaucrats that are empowered to make arbitrary cuts to Medicare providers and make recommendations to non-federal health programs that will limit access to care for seniors. Congress would be required to consider legislation implementing the proposal or alternative proposals with the same budgetary impact on a fast track basis. The recommendations of the board would go into effect automatically unless blocked by subsequent legislative action. …


Action: The amendment was rejected by a vote of 9 to 4. This amendment was introduced in March 2010 as stand-alone legislation, H.R. 4985, the Medicare Decisions Accountability Act of 2010.


[265] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Page 4:


Summary: This amendment would require that all individuals under Medicaid have to demonstrate their identity and citizenship. Currently, there are 11.1 million illegal aliens residing in the United States. This amendment would prevent the crippling burden of providing free health care to these non-citizens from falling on the shoulders of the U.S. taxpayer.


Action: The Democrat majority did not consider this amendment in committee. Rep. Deal introduced a similar amendment in the House Energy & Commerce Committee mark-up of H.R. 3200, which was rejected.


Page 16:


Summary: This amendment would require a valid photo ID when applying for Medicaid or SCHIP. While the bill requires that applicants give a social security number, it contains no requirement that an individual show a valid ID in order to match the individual with the social security number provided—thus creating a vast opportunity for fraud and abuse.


Action: The amendment was rejected by a vote of 9 to 4.


Page 25:


Summary: This amendment would require any individual who wishes to access to a health Exchange or affordability tax credits to provide documentation of citizenship or nationality. The Senate bill contains the same insufficient and ineffective verification methods as the House, causing some to be concerned that it would still allow for illegal immigrants to access the Exchange and subsidies.


Action: The Democrat majority did not consider this amendment in committee.


[266] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Page 8:


Summary: This amendment would repeal the individual mandate. PPACA imposes $17 billion tax increase for non-compliance with the individual mandate. Furthermore, the individual mandate necessitates a government definition of acceptable health care coverage. Because the benefit package found in the Democrats' health care bills are quite large (or in some cases still to be determined by an unelected bureaucratic board of the Secretary of HHS), it is likely that millions of Americans would be unable to keep their existing health care coverage and be forced to pay for more expensive health insurance or pay a fine. CBO found that 3.9 million Americans would pay $17 billion in taxes


Action: The Democrat majority did not consider this bill in committee.


[267] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Pages 22-23:


Summary: This amendment would add a section on interstate purchasing of health insurance, which was previously introduced as H.R. 3217, Health Care Choice Act of 2009. This Act empowers consumers by giving them the ability to purchase an affordable health insurance policy with a range of options. It will allow consumers to purchase health insurance licensed in other states – expanding choice and increasing affordability. Interstate shopping is vital to bringing prices down through free enterprise. The National Center for Policy Analysis notes that a healthy 25-year-old male could purchase a basic health insurance policy in Kentucky for $960 a year. That same policy in New Jersey, however, would cost $5,880 a year. The Health Care Choice Act would enable the market to mitigate such enormous price differentials.


Action: The amendment was rejected by a vote of 9 to 4. This amendment was previously introduced on July 14, 2009 as stand-alone legislation, H.R. 3217, Health Care Choice Act of 2009.


Pages 33-34: "Summary: This amendment would force health insurance companies to compete across state lines, which expands consumers' choice and increases affordability. Interstate shopping is vital to bringing down prices down through free enterprise. Action: The Democrat majority did not consider this bill in committee. Rep. John Shadegg introduced similar stand-alone legislation, H.R. 3217, the Health Care Choices Act of 2009."


[268] Report: "Summary of Republican Amendments Submitted for H.R. 4872—Health Care and Education Reconciliation Act of 2010." Republican Study Committee, August 2010. http://rsc.jordan.house.gov/...


Page 25:


Summary: This amendment would extend the protection of existing coverage in section 1251, "Preservation of Right to Maintain Existing Coverage," to those who are enrolled after the date of enactment. This amendment would change the section of the bill entitled "Protecting the Choice to keep Current Coverage" to include appropriate language in keeping with this section's title. Currently, this section contains language forcing all employer health plans to comply with new mandates from the Secretary of HHS within five years of the bill's enactment, thus essentially preventing Americans from keeping their current plans. This amendment would replace these provisions with the statement "Nothing in this Act shall be construed to prevent or limit individuals from keeping their current health coverage." This language far more closely represents the section title's intent as well as President Obama's promise to the American people.


Action: The Democrat majority did not consider this amendment in committee. This amendment was previously introduced and rejected in House Energy & Commerce Committee mark-up of H.R. 3200.


[269] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Pages 4-5:


We estimate … $575 billion in net savings for the Medicare provisions, a net cost of $28 billion for the Medicaid/CHIP provisions (excluding the expansion of Medicaid eligibility and the additional CHIP funding), $2 billion in savings from provisions intended to help reduce the rate of growth in health spending … and $10 billion in costs for the immediate insurance reforms. …


… ($410 billion) can be attributed to expanding Medicaid coverage for all adults who live in households with incomes below 133 percent of the FPL. … [A]dditional funding for the CHIP program for 2014 and 2015, which would increase such expenditures by an estimated $29 billion. [R]efundable tax credits and reduced cost-sharing requirements for low-to-middle-income enrollees purchasing health insurance through the Exchanges ($507 billion) and credits for small employers who choose to offer insurance coverage ($31 billion).


[270] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Pages 4-5:


We estimate … $38 billion in net savings from the CLASS program….


The increases in Federal expenditures would be partially offset by the penalties paid by affected individuals who choose to remain uninsured and employers who opt not to offer coverage; such penalties total $120 billion through fiscal year 2019….


[271] Calculated with data from the report: "Estimated Revenue Effects Of The Amendment In The Nature Of A Substitute To H.R. 4872, The 'Reconciliation Act Of 2010,' As Amended, In Combination With The Revenue Effects Of H.R. 3590, The 'Patient Protection And Affordable Care Act ('PPACA'),' As Passed By The Senate, And Scheduled For Consideration By The House Committee On Rules On March 20, 2010." United States Congress, Joint Committee on Taxation, March 20, 2010. http://www.jct.gov/publications.html?func=startdown&id=3672


"Fiscal years 2010-19 … [Billions of Dollars] … 6. Require information reporting on payments to corporations [=] 17.1 … NET TOTAL [=] 437.8


NOTE: Revenue provision # 6 (Require information reporting on payments to corporations) has been repealed and is thus subtracted from the total. [Article: "President Signs Repeal of Expanded 1099 Requirements." Journal of Accountancy, April 14, 2011. http://www.journalofaccountancy.com/web/20114071.htm]


CALCULATION: $437.8 net total - $17.1 repeal of revenue provision # 6 = $420.7


[272] This figure of $141 billion, which was calculated by Just Facts using data from the Joint Committee on Taxation and the Centers for Medicare and Medicaid Services, is $17 billion higher than the projection of the Congressional Budget Office.† In keeping with our Standards of Credibility, we are citing the higher of these numbers to give "preferentiality to figures that are contrary to our viewpoints."


† "CBO's Analysis of the Major Health Care Legislation Enacted in March 2010." By Douglas W. Elmendorf. Congressional Budget Office, March 30, 2011. http://www.cbo.gov/ftpdocs/121xx/doc12119/03-30-healthcarelegislation.pdf

Page 2: "Table 1. Estimated Budgetary Effects of the Enactment of PPACA [Patient Protection and Affordable Care Act] and the Health Care Provisions of the Reconciliation Act … (Billions of dollars, by fiscal year) … March 2010 Estimates … Net Increase or Decrease (-) in the Deficit … 2010-2019 [=] -124"


[273] "2011 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds." United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, May 13, 2011. https://www.cms.gov/reportstrustfunds/downloads/tr2011.pdf


"Overriding the [Affordable Care Act] productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to far higher costs for Medicare in the long range than those projected under current law."


[274] Letter: "Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers." By John D. Shatto and M. Kent Clemens. United States Department of Health and Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, May 13, 2011. http://www.cms.gov/...


Page 2:


The purpose of the SGR [Sustainable Growth Rate] system, which was enacted as part of the Balanced Budget Act of 1997, is to limit growth in spending on physician services to a sustainable rate, roughly in line with the rate of overall economic growth.


Because actual physician-related spending has exceeded the target spending levels for 2001 through 2009, physician payment reductions have been scheduled for every year since 2002. An update of −4.8 percent was required and was allowed to take effect in 2002—the only historical year in which a negative physician update was implemented under the SGR. For the next 9 years (2003-2011), scheduled negative updates of at least −5 percent were overridden by new legislation, which provided updates ranging from 0 percent to 2.2 percent. For 2004 through 2006, these legislative acts not only provided replacement updates and increased the actual physician spending, they also specified that the target level of spending would not be increased to match.5 Thus, the cumulative difference between actual and target spending has increased substantially. Each of the legislative changes to the physician updates for 2007through 2011 increased both actual and target spending, but required that the payment updates for subsequent years be determined as if the updates in the prior years had not been changed.


Page 6: "The increasing differential between Medicare and private payment rates is due to the productivity adjustments in 2012 and later for the Medicare payment updates (and, to a lesser degree, to the other, smaller downward adjustments in 2010-2019 specified by the ACA in addition to the productivity adjustments)."


[275] "Remarks by the President on 20th Anniversary of the Americans with Disabilities Act

South Lawn." By Barack Obama. The White House, July 26, 2010. http://www.whitehouse.gov/...


So the Affordable Care Act I signed into law four months ago will give every American more control over their health care—and it will do more to give Americans with disabilities control over their own lives than any legislation since the ADA [Americans with Disabilities Act]. …


… And because Americans with disabilities are living longer and more independently, this law will establish better long-term care choices for Americans with disabilities as a consequence of the CLASS Act, an idea Ted Kennedy championed for years. (Applause.)


[276] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 14:


CLASS Program


Title VIII of the health reform act establishes a new, voluntary, Federal insurance program providing a cash benefit if a participant is unable to perform at least two or three activities of daily living or has substantial cognitive impairment. The program will be financed by participant premiums, with no Federal subsidy. Participants will have to meet certain modest work requirements during a 5-year vesting period before becoming eligible for benefits. Benefits are intended to be used to help purchase community living assistance services and supports (CLASS) that would help qualifying beneficiaries maintain their personal and financial independence and continue living in the community. Benefits can also be used to help cover the cost of institutional long-term care. …


[277] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 14:


We estimate that roughly 2.8 million persons will participate in the program by the third year. This level represents about 2 percent of potential participants, compared to a participation rate of 4 percent for private long-term care insurance offered through employers. Factors affecting participation in CLASS include the program's voluntary nature, the lack of a Federal subsidy, a minimal premium for students and individuals with incomes under 100 percent of the FPL (initially $5 per month), a relatively high premium for all other participants as a result of adverse selection and the effect of subsidizing participants paying the $5 premium, a new and unfamiliar benefit, and the availability of lower-priced private long-term care insurance for many.


[278] Interview: "Meet the senator who killed the CLASS Act." By Sarah Kliff. Washington Post, October 18, 2011. http://www.washingtonpost.com/...


If anyone can claim responsibility for the CLASS Act's demise, it's probably Sen. Judd Gregg. During the health reform debate, the former Republican senator from New Hampshire secured an amendment requiring the Department of Health and Human Services to certify that the long-term insurance program would be fiscally sound. …


Sen. Judd Gregg: I knew we weren't going to kill the CLASS Act because it was Sen. Ted Kennedy's proposal, and he was very sick, and most of us were very sensitive to the fact he was sick. This was his last hurrah, legislatively. I knew we were going to implement it, although I didn't think the concept was sound. Conceptually, it makes sense to prefund long-term care insurance.... but what this bill did was just the opposite. It was totally unsound.


My thought was, let's put in an amendment that would be hard to oppose, that in effect would either make the proposal sound or would kill it.


[279] Report: "Regulations Pursuant to the Patient Protection and Affordable Care Act (P.L. 111-148)." By Curtis W. Copeland, Congressional Research Service, April 13, 2010. http://www.ropesgray.com/files/upload/RegulationsPursuanttothePPACA.pdf


Page 7:


Section 8002 of the act ("Establishment of a National Voluntary Insurance Program for Purchasing Community Living Assistance Services and Support") amended the PHSA [Public Health Service Act] by, among other things, adding a new Section 3203 ("CLASS Independence Benefit Plan") that requires the Secretary to develop at least three "actuarially sound benefit plans as alternatives for consideration for designation by the Secretary as the CLASS Independence Benefit Plan under which eligible beneficiaries shall receive benefits under this title." Subsection (a)(2) of this new section requires a "CLASS Independence Advisory Council" to evaluate the alternative plans and recommend the one that "best balances price and benefits to meet enrollee's needs in an actuarially sound manner." Using this information, Subsection (a)(3) requires the Secretary to designate a benefit plan as the CLASS Independence Benefit Plan, and to do so "along with details of the plan and the reasons for the selection by the Secretary, in a final rule that allows for a period of public comment."


[280] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Page 15:


In general, voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants. Individuals with health problems or who anticipate a greater risk of functional limitation would be more likely to participate than those in better-than-average health. Setting the premium at a rate sufficient to cover the costs for such a group further discourages persons in better health from participating, thereby leading to additional premium increases. This effect has been termed the "classic assessment spiral" or "insurance death spiral." The problem of adverse selection is intensified by requiring participants to subsidize the $5 premiums for students and low-income enrollees. Although Title VIII includes modest work requirements in lieu of underwriting and specifies that the program is to be "actuarially sound" and based on "an actuarial analysis of the 75-year costs of the program that ensures solvency throughout such 75-year period," there is a very serious risk that the problem of adverse selection will make the CLASS program unsustainable.13


13 An analysis of the potential adverse selection problems for the CLASS program was performed by a nonpartisan, joint workgroup of the American Academy of Actuaries and the Society of Actuaries. Their report was issued on July 22, 2009 and is available at http://www.actuary.org/pdf/health/class_july09.pdf.


[281] Blog post: "Secretary Sebelius Cannot Fix CLASS." By Brian Blase and John S. Hoff. Heritage Foundation, March 16, 2011. http://heritage.org/...


The main problem is that the program's design will result in a badly skewed pool of participants. This is primarily because health status cannot be a factor used for calculating premiums. This means healthy individuals are less likely to participate because they do not receive credit in the form of a lower premium, like they would if they purchased LTC insurance in the private market. Instead, CLASS participants are likely to be disabled individuals who are able to work part-time and individuals who anticipate future LTC needs.


Moreover, the adverse selection problem is exacerbated because individuals earning below the poverty line are subjected to only a $5 monthly premium, and less healthy people are much more likely to be below the poverty line. The artificially low premium for them means that premiums will have to be much higher for others, which will diminish overall enrollment in the program and worsen its long-run solvency. The poor design of CLASS almost guarantees that the program will collapse or need a bailout.


[282] Report: "Estimated Financial Effects of the 'Patient Protection and Affordable Care Act,' as Amended." By Richard S. Foster. U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf


Pages 14-15:


CLASS Program


Participants will have to meet certain modest work requirements during a 5-year vesting period before becoming eligible for benefits. Benefits are intended to be used to help purchase community living assistance services and supports (CLASS) that would help qualifying beneficiaries maintain their personal and financial independence and continue living in the community. Benefits can also be used to help cover the cost of institutional long-term care.


As shown in the table on page 2, we estimate a net Federal savings for the CLASS program of $38 billion during the first 9 years of operations—the first 5 of which are prior to the commencement of benefit payments. After 2015, as benefits are paid, the net savings from this program will decline; in 2025 and later, projected benefits exceed premium revenues, resulting in a net Federal cost in the longer term.12


12 The CLASS program is intended to be financed on a long-range, 75-year basis through participant premiums that would fully fund benefits and administrative expenses. If this goal can be achieved, despite anticipated serious adverse selection problems (described subsequently), then annual expenditures would be met through a combination of premium income and interest earnings on the assets of the CLASS trust fund. The Federal Budget impact would be the net difference between premium receipts and program outlays. Thus, the trust fund would be adequately financed in this scenario, but the Federal Budget would have a net savings each year prior to 2025 and a net cost each year thereafter.


[283] Article: "Obama to Scrap a Portion of Health Care Law." By Robert Pear. New York Times, October 14, 2011. http://www.nytimes.com/2011/10/15/health/policy/15health.html?hp


The Obama administration announced Friday that it was scrapping a long-term care insurance program created by the new health care law because it was too costly and would not work. …


"We have not identified a way to make Class work at this time," Ms. Sebelius said. She said the program, which had been championed by Senator Edward M. Kennedy, Democrat of Massachusetts, was financially unsustainable.


[284] Interview: "Meet the senator who killed the CLASS Act." By Sarah Kliff. Washington Post, October 18, 2011. http://www.washingtonpost.com/...


If anyone can claim responsibility for the CLASS Act's demise, it's probably Sen. Judd Gregg. During the health reform debate, the former Republican senator from New Hampshire secured an amendment requiring the Department of Health and Human Services to certify that the long-term insurance program would be fiscally sound. …


Sen. Judd Gregg: I knew we weren't going to kill the CLASS Act because it was Sen. Ted Kennedy's proposal, and he was very sick, and most of us were very sensitive to the fact he was sick. This was his last hurrah, legislatively. I knew we were going to implement it, although I didn't think the concept was sound. Conceptually, it makes sense to prefund long-term care insurance.... but what this bill did was just the opposite. It was totally unsound.


My thought was, let's put in an amendment that would be hard to oppose, that in effect would either make the proposal sound or would kill it.


[285] Article: "Obama opposes repeal of healthcare program suspended last week." By Julian Pecquet. The Hill, October 17, 2011. http://thehill.com/...


"President Obama is against repealing the health law's long-term care CLASS Act and might veto Republican efforts to do so, an administration official tells The Hill, despite the government's announcement Friday that the program was dead in the water."


[286] Article: "Obama: 'If You Like Your Doctor, You Can Keep Your Doctor'." By Mary Lu Carnevale. Wall Street Journal, June 15, 2009. http://blogs.wsj.com/...


President Barack Obama's address to the annual meeting of the American Medical Association today didn't break new ground, but attempted to assure doctors and their patients that his prescription for overhauling the health care system would be good for them.


Remarks of President Barack Obama – As Prepared for Delivery

American Medical Association

Chicago, Illinois

June 15, 2009


So let me begin by saying this: I know that there are millions of Americans who are content with their health care coverage – they like their plan and they value their relationship with their doctor. And that means that no matter how we reform health care, we will keep this promise: If you like your doctor, you will be able to keep your doctor. Period. If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what. My view is that health care reform should be guided by a simple principle: fix what's broken and build on what works.


[287] Calculated with data from: "National Health Expenditure Web Tables (Calendar Years 1960-2010)." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services. Accessed January 16, 2012 at http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf


Table 4: "National Health Expenditures, by Source of Funds and Type of Expenditure: Calendar Years 2004-2010 [billions $]"


Variables: Private health insurance "health consumption expenditures" and "net cost of health insurance"


Net cost of health insurance is calculated as the difference between CY [calendar year] incurred premiums earned and benefits paid for private health insurance. This includes administrative costs, and in some cases, additions to reserves, rate credits and dividends, premium taxes, and plan profits or losses. Also included in this category is the difference between premiums earned and benefits paid for the private health insurance companies that insure the enrollees of the following programs: Medicare, Medicaid, Children's Health Insurance Program, and workers' compensation (health portion only).


NOTE: An Excel file containing the data and calculations is available upon request.


[288] Book: Medical Care Output and Productivity. Edited by David M. Cutler and Ernst R. Berndt. University of Chicago Press, 2001.


Chapter 7: "National Health Accounts/National Income and Product Accounts Reconciliation: Hospital Care and Physician Services." By Arthur Sensenig and Ernest Wilcox.


Page 276: "Since 1964, the U.S. Department of Health and Humans Services has published an annual series of statistics presenting total national health expenditures during each year. … [The] net cost of private health insurance [is] … the difference between premiums earned by insurers and the claims or losses for which insurers become liable…."


[289] Dataset: "National Health Expenditure Web Tables (Calendar Years 1960-2010)." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services. Accessed January 16, 2012 at http://www.cms.gov/NationalHealthExpendData/downloads/tables.pdf


Net cost of health insurance is calculated as the difference between CY [calendar year] incurred premiums earned and benefits paid for private health insurance. This includes administrative costs, and in some cases, additions to reserves, rate credits and dividends, premium taxes, and plan profits or losses. Also included in this category is the difference between premiums earned and benefits paid for the private health insurance companies that insure the enrollees of the following programs: Medicare, Medicaid, Children's Health Insurance Program, and workers' compensation (health portion only).


[290] "Quick Definitions for National Health Expenditure Accounts (NHEA) Categories." U.S. Department of Health & Human Services, Centers for Medicare and Medicaid Services. Accessed January 16, 2012 at http://www.cms.gov/nationalhealthexpenddata/downloads/quickref.pdf


Private Health Insurance:

Includes premiums paid to traditional managed care, self-insured health plans and indemnity plans. This category also includes the net cost of private health insurance which is the difference between health premiums earned and benefits incurred. The net cost consists of insurers' costs of paying bills, advertising, sales commissions, and other administrative costs; net additions to reserves; rate credits and dividends; premium taxes; and profits or losses.


[291] Book: Cost Accounting. By V. Rajasekaran & R. Lalitha. Dorling Kindersley, 2011.


Page 189:


Administration overhead … Examples: Salary of administrative-office personnel, rent, taxes of general office, remuneration and sitting fees of directors, lighting, heating and other expenses of general office; all stationary and communication of expenses of office, audit fees, legal fees, insurance premium of office buildings, furniture and fixtures and their respective depreciation and bank changes. …


Selling overhead … Examples: Salary and all incentives offered for sales personnel, travelling expenses of sales personnel, rebates and discounts in the costs of price list, brochures, samples, collections costs for debts, repair and maintenance, insurance premium paid and deprecation with respect to sales office building, sales office equipment, furniture and fixtures.


[292] Calculated with the following data:


a) "Industries, Health Care: Insurance and Managed Care." Fortune, May 5, 2008. http://money.cnn.com/...


b) "Industries, Health Care: Insurance and Managed Care." Fortune, May 4, 2009. http://money.cnn.com/...


c) "Industries, Health Care: Insurance and Managed Care." Fortune, May 3, 2010. http://money.cnn.com/...


d) "Industries, Health Care: Insurance and Managed Care." Fortune, May 23, 2011. http://money.cnn.com/...


NOTE: An Excel file containing the data and calculations is available upon request.


[293] Book: The Essentials of Finance and Budgeting. Harvard Business School Publishing, 2005. Page 33:


Revenues - Expenses = Net Income (or Net Loss)


An income statement starts by showing the company's revenues: the amount of money that resulted from selling products or services to customers. A company may have other revenues as well. In many cases, these additional revenues derive from investments or interest income from the firm's cash holdings.


Various costs and expenses—from the costs of making and storing a company's goods, to depreciation of plant and equipment, to interest expense and taxes—are then deducted from revenues. The bottom line—what's left over—is the net income, or net profit or net earnings, for the period covered by the income statement.


Pages 47-48: "PROFIT MARGIN  The profit margin—sometimes called return on sales, or ROS—indicates a rate of return on sales. It tells us what percentage of every dollar of sales makes it to the bottom line. Calculate the profit margin as follows: Profit Margin = Net Income / Net Sales"


[294] Article: "Top Dems blame insurance industry as health care roadblock." By Deirdre Walsh. CNN, July 30th, 2009. http://politicalticker.blogs.cnn.com/...


As Congress prepares to head into a monthlong August recess, Democratic leaders on Capitol Hill ripped into the insurance industry, framing the health care debate as a battle against insurers. …


Senate Majority Leader Harry Reid also called out insurers at a news conference Thursday.


"I don't think we should be crying great big tears for the insurance industry," he said. "There is no business in America that makes more money than the insurance industry. Over the past 10 years their profits have been increased by over 450 percent.


[295] Dataset: "Top industries: Most profitable." Fortune, May 4, 2009. http://money.cnn.com/...


[296] Entry: "managed care." American Heritage Medical Dictionary. Houghton Mifflin, 2007. http://medical-dictionary.thefreedictionary.com/managed+care


"Any arrangement for health care in which an organization, such as an HMO, another type of doctor-hospital network, or an insurance company, acts as intermediate between the person seeking care and the physician."


[297] Article: "Networks Aid Obama's War on Insurers' Profits." By Julia A. Seymour. Business & Media Institute, October 28, 2009. http://www.businessandmedia.org/articles/2009/20091028162719.aspx


Chris Matthews showed his distain for the companies' profits on NBC Sept. 6 saying: "I'd regulate the insurance companies like public utilities, and squeeze them down to a reasonable profit level." He asked his guests that day, "Why don't they do that? That's the solution."


Katty Kay, BBC's Washington correspondent, replied, "Well, you'd stop the insurance companies making outrageous profits."


[298] Dataset: "Industry Summary." Yahoo! Finance. Current as of January 13, 2002. http://biz.yahoo.com/p/sum_qpmu.html


Variable: "Net Profit Margin % (most recent quarter)"


[299] Transcript: "Obama Unveils Compromise Health Care Deal." By Julie Rovner. NPR, February 22, 2010. http://www.npr.org/templates/story/story.php?storyId=123979335


[300] Dataset: "Industry Summary." Yahoo! Finance. Current as of January 13, 2002. http://biz.yahoo.com/p/sum_qpmu.html


Variable: "Net Profit Margin % (most recent quarter)"


[301] Article: "Huge Profits for Health Insurers as Americans Put Off Care" or "Health Insurers Making Record Profits as Many Postpone Care." By Reed Abelson. New York Times, May 13, 2011. http://www.nytimes.com/2011/05/14/business/14health.html?_r=1


[302] Dataset: "Sectors > Services > Publishing - Newspapers." Yahoo! Finance. Current as of January 13, 2002. http://biz.yahoo.com/p/sum_qpmu.html


"Net Profit Margin % (most recent quarter) … The New York Times Company (NYT) [=] 2.92%"


[303] Dataset: "Industry Summary." Yahoo! Finance. Current as of January 13, 2002. http://biz.yahoo.com/p/sum_qpmu.html


Variable: "Net Profit Margin % (most recent quarter)"


[304] Article: "Uninsured rate remains stable even as incomes drop." By Doug Trapp. American Medical News, September 26, 2011. http://www.ama-assn.org/amednews/m/2011/09/26/gsb0926.htm


[305] Press Release: "New U.S. census data show rise in number of uninsured Americans, underscoring importance of Affordable Care Act." Statement from Alan Baker (interim executive director), American Public Health Association, September 13, 2011. http://www.apha.org/...


[306] Article: "Key points of U.S. Census report: Health insurance and poverty." By Star-Ledger Staff. Star Ledger, September 14, 2011. http://www.nj.com/njvoices/index.ssf/2011/09/key_points_of_us_census_report.html


[307] House editorial: "Bleak News on Health Insurance." New York Times, September 14, 2011. http://www.nytimes.com/...


[308] Report: "Income, Poverty, and Health Insurance Coverage in the United States: 2010." By Carmen DeNavas-Walt and others. U.S. Census Bureau, September 2011. http://www.census.gov/prod/2011pubs/p60-239.pdf


Page 1: "This report presents data on income, poverty, and health insurance coverage in the United States based on information collected in the 2011 and earlier Current Population Survey Annual Social and Economic Supplements (CPS ASEC) conducted by the U.S. Census Bureau."


Page 26: "Table 8. People Without Health Insurance Coverage by Selected Characteristics: 2009 and 2010"


  2009 2010
Uninsured Number Portion of

Uninsured†

2010 Portion of

Uninsured†

Total 48,985 100% 49,904 100.0%
Not a citizen 9,729 20% 9,667 19.4%
Income of $50,000 to $74,999 8,997 18% 8,831 17.7%
Income of $75,000 or more 9,669 20% 9,473 19.0%
Income of $50,00 or more† 18,666 38% 18,304 36.7%


NOTE: † Calculated by Just Facts


[309] Report: "Income, Poverty, and Health Insurance Coverage in the United States: 2010." By Carmen DeNavas-Walt and others. U.S. Census Bureau, September 2011. http://www.census.gov/prod/2011pubs/p60-239.pdf


Page 75:


APPENDIX C.

ESTIMATES OF HEALTH INSURANCE COVERAGE

 

Quality of Health Insurance Coverage Estimates


National surveys and health insurance coverage. Health insurance coverage is likely to be underreported on the Current Population Survey (CPS). While underreporting affects most, if not all, surveys, underreporting of health insurance coverage appears to be a larger problem in the Annual Social and Economic Supplement (ASEC) than in other national surveys that ask about insurance. … Compared with other national surveys, the CPS estimate of the number of people without health insurance more closely approximates the number of people who are uninsured at a specific point in time during the year than the number of people uninsured for the entire year.


Reporting of coverage through major federal health insurance programs. The CPS ASEC data underreport Medicare and Medicaid coverage compared with enrollment and participation data from the Centers for Medicare and Medicaid Services (CMS).1 Because the CPS is largely a labor force survey, interviewers receive less training on health insurance concepts than labor concepts. Additionally, many people may not be aware that a health insurance program covers them or their children if they have not used covered services recently. CMS data, on the other hand, represent the actual number of people who have enrolled or participated in these programs. …


1 CMS is the federal agency primarily responsible for administering the Medicare and Medicaid programs at the national level.


NOTE: Credit for bringing attention to the facts in the footnotes above and below belongs to Jeffrey H. Anderson [Op-ed: "The Real Number of Uninsured Americans." Weekly Standard, December 29, 2010. http://www.weeklystandard.com/blogs/real-number-uninsured_525775.html]


[310] Report: "Income, Poverty, and Health Insurance Coverage in the United States: 2010." By Carmen DeNavas-Walt and others. U.S. Census Bureau, September 2011. http://www.census.gov/prod/2011pubs/p60-239.pdf


Pages 75-76:


The State Health Access Data Assistance Center (SHADAC) of the University of Minnesota has worked with the U.S. Census Bureau, CMS, and the Office of the Assistant Secretary for Planning and Evaluation (ASPE) on a research project to evaluate why CPS ASEC [the Current Population Survey Annual Social and Economic Supplement (i.e., this report)] estimates of the number of people with Medicaid are lower than counts of the number of people enrolled in the program from CMS [the Centers for Medicare and Medicaid Services]. Reports from all four phases of the research project are available from the Census Bureau's Web site at <www.census.gov/did/www/snacc/>.


During Phase 1, a database of Medicaid and Medicare enrollment was built using the CMS Medicaid Statistical Information System (MSIS) files merged with CMS Medicare Enrollment Database (EDB) files. The quality of the database was evaluated using two Census Bureau files: the Master Address File/Auxiliary Reference File (MAFARF) and the Person Characteristics File (PCF).


… A key finding indicating survey response error in the CPS ASEC was that 16.9 percent of people with an MSIS record indicating Medicaid coverage reported in the CPS ASEC that they were uninsured. …


Phase 4 consisted of repeating the Phase 2 process using the National Health Interview Survey (NHIS) data instead of CPS ASEC data. The purpose of this was twofold: to provide explanations for the differences found between NHIS data and MSIS files and to examine how differing survey designs and methodologies affect the survey data and estimates. The report found that the NHIS Medicaid undercount was 27.3 percent in 2001 and 21.7 percent in 2002, but noted that the NHIS added questions in 2004 and these results may not apply to more recent data.


NOTE: See the next footnote, which shows that the uninsured undercount in 2005 was even greater than 16.9%.


[311] Calculated with data from:


a) Report: "Income, Poverty, and Health Insurance Coverage in the United States: 2010." By Carmen DeNavas-Walt and others. U.S. Census Bureau, September 2011. http://www.census.gov/prod/2011pubs/p60-239.pdf


Page 77: "Table C-1: Health Insurance Coverage: 1987 to 2010 (Numbers in thousands. People as of March of the following year) … 2005 … Not covered [=] 43,035"


b) Report: "Research Project to Understand the Medicaid Undercount: Phase V Research Results: Extending the Phase II Analysis of Discrepancies between the National Medicaid Statistical Information System (MSIS) and the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) from Calendar Years 2000-2001 to Calendar Years 2002-2005. By Michael Davern and others. State Health Access Data Assistance Center, January 4, 2010. http://www.census.gov/...


Page 2:


This paper describes the results of the fifth phase of a multi-phase research project coordinated by the University of Minnesota's State Health Access Data Assistance Center (SHADAC), Centers for Medicare and Medicaid Services (CMS), Assistant Secretary for Planning and Evaluation (ASPE), National Center for Health Statistics (NCHS), Administration for Healthcare Research and Quality (AHRQ), and U.S. Census Bureau. The research is designed to explain why discrepancies exist between survey estimates of enrollment in Medicaid and the number of enrollees reported in state and national administrative data. …


When measured using raw counts (i.e., counts with no or minimal adjustments), the size of the undercount is about 35 percent (i.e., the CPS ASEC [the Current Population Survey Annual Social and Economic Supplement (i.e., the report cited in (a) above)] shows 35 percent fewer people enrolled in Medicaid than MSIS [Medicaid Statistical Information System] administrative records). Some of this raw undercount can be accounted for by the fact that the two data sources have different concepts of Medicaid coverage as well as different universes. When the counts are fully adjusted to account for these differences, the undercount is reduced by about 3 percentage points to 32 percent. …


Page 3:


The linked file suggests that a predominant part of the adjusted undercount can be accounted for by false negative respondent error (i.e., persons on the CPS ASEC being incorrectly classified as lacking Medicaid coverage). Most of this error comes from cases where enrollment status was explicitly reported (as opposed to cases where the enrollment status was imputed or edited).


Page 7:


Table 3 shows that for all of the years studied, similar conclusions can be drawn regarding the importance of false negative error as a contributor to the undercount.


Table 3: False Negative Survey Errors on the CPS … Calendar Year 2005 … "Other Insurance" status of false negative population … Uninsured [=] 7,800,000


Table 3 also shows the "other insurance" status of the population with false negative errors (i.e. whether or not the person is categorized on the CPS ASEC as having any other insurance coverage, either public or private). This information is useful when considering the impact that the false negative population has on the estimate of the size of the uninsured population. Surveyed persons mistakenly classified as not enrolled in Medicaid will only affect the estimate of the uninsured population if they are not also classified as having any other insurance coverage. Table 3 shows that in all years only about 40% of the false negative population is classified as having no other insurance – i.e. less than half of the population with false negative errors has any impact on the estimate of the uninsured population.


CALCULATION: 7,800,000 uninsured false negatives in 2005 / 43,035,000 uninsured in the Census Bureau's 2005 Current Population Survey = 18.1%


© 2012 Just Facts

Information provided by Just Facts is not legal or investment advice.


 

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